The TrakM8 Series..how much of a crap deal was Route Monkey? A source comes forward

Comments

1. ---

   Paul Scott

   23 January 2016, 01:31

   Tom & Source,

   I’m not ignoring the accounts of Route Monkey. I looked at them in December, and was very surprised at the ridiculous revenue recognition, and massive debtors. In a nutshell, the accounts of RM looked like a dodgy AIM China or India company!

   So I made some enquiries, and was told that TRAK is only interested in their IP, and blending it into their existing business, to develop much better new products.

   On the face of it, I agree that the accounts of RM look ridiculous, and need explaining. I will be focusing on this as a key area in my interview with John Watkins on Monday. TRAK after all know far more about their market than you, me, or your source, so until proven otherwise, I will assume that TRAK knows what it’s doing. Let’s find out on Monday when I put this, and other questions to management.

   The RM acquisition is small beer relative to the market cap of the group – only about roughly 5% when it was done (a bit more now, as the SP has fallen). But it definitely needs a fuller explanation. Note also that TRAK is not responsible for the accounts of an acquired company prior to its acquisition. So I assume TRAK will be restating the debtors, etc, in RM’s accounts now it is part of the group.

   These questions need to be asked of the company, before any conclusions are drawn. So that’s what I will be doing. Unlike yourself Tom, as you seem to like to assume guilt & wrongdoing before you’ve given the other side a chance to respond! How is that fair or reasonable?

   Regards, Paul.

2. ---

   Drunken Sailor

   23 January 2016, 04:31

   Paul,

   Be sure to ask John on Mon why, if he is only interested in the IP, he did not just buy that and leave the rest of the shit behind. If Tom’s source spotted what a load of crap the figures were and you spotted it and Tom spotted it, then surely John spotted it. RM clearly did not have a queue of eager buyers at their door and that puts the only buyer in a very strong position to be able to cherry pick the bits he wants, rather than doing an SGH and way overpaying for the whole turd rather than picking out the bits of sweet corn.

   I am glad you are confident they are going to restate, but won’t that make rather a mess of Finncaps forecast?

   Integration of acquired IP into other products is quite a lengthy and expensive process. The IP needs to be pretty special to make it worth doing it that way rather than developing your own. With IP that special why did no one else want to buy it? John must be a real genius to see these things that others can’t, so I am sure he has got all the right answers to these difficult questions. He therefore does not need an idiot PR man, who was given the chance to put the other side of the story, but couldn’t even answer a simple question on net cash properly – a definite cost saving that can be made there.

   Looking forward seeing your report of your interview, I am sure it won’t be a Zak Mir Tips TV style suck up.

3. ---

   Simple Moving Avarice

   23 January 2016, 06:12

   I think they bought RM for the people – specifically the guys (and gals) programming the optimisation algorithms. RM described itself as providing ‘bespoke algorithm creation’ which is a hard way to make money as a business, but it is the meat-and-drink of an internal development team.

4. ---

   wildrides

   23 January 2016, 07:52

   BOO ……………… 5 – 0 to Scotty
   TrakM8 …………………….. 1 – 1 Whinny scores an equalizer in the 2nd half 30 minutes in .

   Drunk ……… banned to the stand for touchline managerial interference with the linesman .

5. ---

   SkepticalInvestor

   23 January 2016, 10:30

   Hi Tom/Drunken Sailor,

   You seem to have a good handle on Finncap’s forecasts – could I ask one simple question. By how much were Finncap’s numbers upgraded as a result of the Route Monkey deal?

   Quote, “it is expecting a lot of the profits growth and cash generation over the next 12 months to come from the profits bought in with the Spank The Monkey.”

   OK – so it’s “a lot” is it – how much, say as a percentage, were the profits forecast upgraded by?

   One simple question – could you answer it please – I think you’ll find it’s not a lot at all.

   Looking forward to the evidence that much of the forecast profit next year is coming from this small acquisition and not, say, Direct Line or the AA!

   One simple question, an answer would be great.

6. ---

   phil

   23 January 2016, 17:33

   They thought they a bought a monkey, but in reality they bought a pup, and it’s going to show They aint the first to do that and they sure will not be the last

7. ---

   Drunken Sailor

   24 January 2016, 04:12

   Skeptical,

   As far as I am aware the Finncap report is not in the public domain. If it is I have not read it. I assume Paul has, which is why I asked him the QUESTION about whether the restatements would make a mess of the forecasts.

   On 23 Nov Fincapp increased its share price target for Trak from 250p to 318p.
   On 14 Dec Trak announced an extension to the AA deal. Finncap produced a note, which did not change their shareprice target.
   0n 21 Dec Trak announced the RM deal and a discounted placing at 333p and Fincapp upped their shareprice target to 425p.
   Shareprice at close on Fri 267.5p Mid.

   Not having seen the full text of any Finncap report, I can only guess from the publicly available info above that it was the RM acquisition that got Finncap’s juices flowing.

   SMA,

   There is absolutely no need to buy a company to get its people, particularly one which has been up for sale for nearly 2 years with any interested party walking away once they had looked at the books. Just approach the people you really want and make them a better offer than the failing company they are working for can make them. This sort of work can be done remotely, so there would be no need to make them relocate if they did not want to.

   Wildes,

   Do you have anything to add to the debate on Trak or is your only contribution to make banal comments about those who are contributing to the debate? Which is a very BBM like thing to do