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.

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.

More on Scottish Water - Smart Metering:

Smart Metering: Internet data management

Smart Metering is a data service that allows you to access information about your water usage, on-line. If you already have a water meter, our Business Solutions team can help you decide if you would benefit from having a Smart Meter installed.

A Smart Meter will allow you to record monitor and evaluate your water usage. The data it provides will enable you to determine if you are using the correct size of meter or identify any problems such as bursts, at an early stage. Accessed from your PC, our Smart Metering service can help you to:

Improve the understanding of your water consumption and flow patterns
Track, predict and change trends in demand
Warn of low or high flow
Identify waste minimisation opportunities

Automatic Meter Reading Service

The Automatic Meter Reading (AMR) service may benefit you if you operate a larger network and can also monitor multiple utility meters. This service can report your water flow and utility consumption data directly to your PC allowing you to identify where savings can be made. This service can automatically record and monitor individual meter patterns and report problems or excessive usage.

In addition to our two standard services, our Business Solutions team can talk to you about any aspect of Smart Metering and tailor a service specifically for your needs.

Contact us

We also offer detailed water auditing, temporary meter logging with internet access, leak detection and repair as well as water efficiency reviews. To find out more about our range of Business Solutions go to the 'Water management' pages. These services are priced individually, depending on your requirements.

Please email our Business Solutions team with your enquiry at smart.metering@scottishwater.co.uk or telephone Andrew Webb on 01786 458902 to discuss how we can help you.

Qonnectis plc
25 July 2006


QONNECTIS PLC

PLACING and ISSUE OF OPTIONS


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
placed, subject to certain conditions, 61,200,000 new Ordinary 1p shares at 1p
per share ('the Placing') with investors.

The placing, which was arranged by HB Corporate, will raise gross proceeds of
612,000 to provide additional working capital for the Qonnectis business.
Application has been made to the London Stock Exchange for the new Ordinary
shares, which will rank pari passu with the existing shares, to be admitted to
trading on AIM and it is expected this will become effective on 31 July 2006

Michael Tapia, Chief Executive and Percy Albuquerque, non-executive director,
are respectively subscribing for 500,000 shares and 700,000 shares in the
placing at the placing price. Following the placing Michael Tapia will hold
21,028,776 shares representing 9.62% of the Company and Percy Albuquerque will
hold 700,000 shares representing 0.32% of the Company.

In addition the Board of the Company has agreed to award the following options
to Directors:

Director Number of Options Exercise price

Michael Tapia 1,000,000 1.5p
1,500,000 2.5p
2,000,000 4p
Percy Albuquerque 11,500 1.5p
17,000 2.5p
23,000 4p
Richard Taylor 74,000 1.5p
110,000 2.5p
150,000 4p

The options are exercisable from the first anniversary of the Placing until 31
July 2009. They are not part of any employees incentive scheme.

As we thought, then. You never know, a few may trickle out into the market quite cheaply, so we could get a buying opportunity at the end of the month.

Nice to be proven right sooner rather than later! The sum raised is very reasonable. Could well be looking to pick up a few at these prices if some do trickle out and the spread doesn't look too horrendous.

1st August 2006

Qonnectis plc

Holding in Company


The Board of Qonnectis plc ('Qonnectis' or 'the Company'), the energy and water
conservation IT service provider, announces that the Company was notified today
that City Equities Limited which purchased 25,000,000 shares in the Company's
recent placing, representing 11.4% of the enlarged issued share capital, has
sold all of these shares to certain of its private customers, acting as
Principal, and that it no longer has a notifiable interest in the issued share
capital of Qonnectis plc.

Wish I was one of those private customers . . . .

I wonder what they paid. Quite an upsurge in activity since the placing including a single transaction for 5m at 2.00p today at 14.11. Buy/sell not indicated but looks as if it may have been a buy.

Don't feel envious. I would guess they paid through the nose. These boys are not known for their generosity!

You can bet your last it was less than 2p, though - and I'd be surprised if it was much more than 1.5p. A bargain for the buyers, and a tidy profit for the seller.

ST, see link to latest broker research report from HB:

http://www.hoodlessbrennan.com/CMS_FileCache/HOODLE004_595_1.pdf

From the HB report, 0.6m rasied at 1p.

Company now dependent upon achieving its sales goals.

HB Re-assessment from Spec-Buy to High Spec Buy

Silvermede, that's a great find, thanks very much!

I found I agree with most of what HB had to say, although I'd be slightly more optimistic when it comes to the comment under weaknesses that "Legislative changes may be needed to stimulate demand", as I think the product is exciting enough on its own merits to attract demand from industrial customers. WDIK, though - I'm not the expert!

All in all I'd say HB have taken an adequately conservative and realistic approach. Their comment that QTI may need a further fundraising is fair comment and worth bearing in mind. All in all I see nothing to deter me from continuing to hold, although I'd possibly hesitate to add a lot more to my holding as I consider that QTI occupies enough space in my portfolio at present.

Once again, thanks for a very useful article!

Interesting report - the 100k turnover estimate to Y/E June 2006 looks on the low side.

Results due any day now?

Still a very wide spread - 0.75/1.75 this morning with a buyer at 1.4.

Only one trade today, but a biggie by QTI's standards. Somebody invested nearly 25k . . . .


Trade time Price (p) Volume Assumed purchase/sale* (p) Bid (p) Ask (p)
13:00 1.5 1629000 purchase 0.75 1.75


Could be a good signal . . . .

Yes, just noticed that. Within what time frame are you expecting the results?