TrakM8, another lie for Paul Scott to ignore completely - the curious numbers of the Box Deal

Comments

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   Paul Scott

   22 January 2016, 10:23

   Hi Tom,

   I fail to see what relevance any of the above has to the group’s future performance – which is what investors are backing, and on which the company is valued.

   Your favourite stock – Optibiotix – is not valued on its historic profits, is it? No, because there aren’t any! It’s a zero turnover business, burning cash, so by your rules it should be valued at nil, but it’s actually valued at £62m. Why? Because investors are valuing Optibiotix on estimates of future potential.

   TRAK is valued by investors on a multiple of broker forecasts. It’s growing very rapidly, organically mainly, from successful selling of innovative products, to recurring monthly subscribers. The current valuation of TRAK looks fine to me – it’s valued at about 17 times consensus estimates, and it has a history of out-performing against forecasts – upgrades occurred in both Jul 2015, and Nov 2015.

   Your obsessing over minor details in the past is pointless. So the worst thing you can come up with is a £115k discrepancy between £850k claimed profits, and £735k profit reported at Companies House. If I had found such an (immaterial) discrepancy, do you know what I would have done? Picked up the phone, asked to speak the the FD, and requested an explanation. I don’t know the answer, but it is common to adjust profits for acquired companies, to strip out things like owner dividends/salaries, etc. There are often adjustments made in that type of situation.

   Calling this another “lie” is, once again, completely inappropriate, and makes you look silly. If you find some minor differences in the figures, just ask for an explanation from the company.

   As for inter-company transactions – there is nothing sinister about those at all. I used to be FD for a group of companies, and there were thousands of transactions within the group each year – goods might be bought by one company in the group on behalf of another, shared overheads would be split & apportioned out within the group. It’s entirely normal to have loads of inter-company transactions within a group, so your assertion that intercompany deals are “always a bad sign” is nonsense, in my experience.

   The individual company accounts within a group don’t necessarily give you a true picture, because the group may not bother to apportion out & reinvoice overheads, etc. Some groups let the profit build up in one company, it doesn’t matter, because all the group transactions are eliminated on consolidating the accounts. So it’s the overall group accounts that you need to focus on.

   I really can’t work out what your agenda is here. It’s like you’re desperately trying to find a smoking gun, in the misguided belief that TRAK is a wrong ‘un. Trouble is, it’s not a wrong ‘un. It’s a good growth company, that’s doing well.

   Anyway, I’m getting really bored with this, so have come to the conclusion it’s a waste of time rebutting your points, as you never admit you’re wrong anyway, even when you are wrong.

   I’ll let the company answer PI questions when I interview the CEO on Monday, and we can then assess what their side of the story is, and people can make up their own minds.

   Regards, Paul.

   P.S. I’m knackered & gagging for a beer (in Dry January), hence why the above is a bit bad-tempered!! ;-)

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   Drunken Sailor

   22 January 2016, 11:42

   Paul,

   Attention to detail is important. For a company to make so many not all that important mistakes – what is a few £K difference in the true figures and the reported figures between friends after all, is a very bad sign. At best management are incompetent at worst they are deliberately misleading investors. Are there any mistakes that make things look worse than they really are? Anyone who is a bit sloppy will make mistakes that balance out and are therefore irrelevant. All we have seen so far are mistakes that always paint a rosier picture than reality. Perhaps you can show that they also make mistakes in the other direction. If you can’t then the weight of evidence is building and dismissing individual mistakes as irrelevant is holding less and less water.

   Looking forward to your report on what the CEO says on Monday. Do not let the fact that you are invested make you into a Zac Mir, be Jeremy Paxman on steroids and don’t let him duck hard questions – it is the only way to restore credibility after so many mistakes that always flatter reality.

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   SiddyG

   22 January 2016, 14:11

   Although the pretax profits of £734,651 are shown in the accounts filled for BOX if you look at the BOX admission document (http://www.trakm8.com/wp-content/uploads/2014/01/RNS-9764P-Schedule-1-Admission-Document_8th-Oct-2013.pdf) its states pretax profits of £850,000 as mentioned in the RNS.

   I am no expert in accountancy but the admission document states that the accounts have been restated in IFRS as opposed to UK GAAP, which is what BOXs own accounts have been produced in accordance with. Could this be the reason for the discrepancy? If so i believe you owe trakm8 an apology for branding them liars.

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   Tom Winnifrith

   22 January 2016, 16:17

   SiddyG

   So presumably 2014 a/c prepped by TrakM8 will show a restated 850k for 2012 for Box. Oh…they dont. The 850k number appears nowhere – just face it TrakM8 lied again

   T

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   wildrides

   23 January 2016, 06:49

   Its looking like 2 -0 to Beam Me up Scotty in the debate with Whinny Froth re BOO and Trackm8

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