Water Intelligence Share Discussion Threads

[effortless cool] 26/6/2018 09:16

Dozey3 - It was clear from our AGM conversation that PDS has serious ambitions for this business, both in terms of international expansion and technological development. Today's RNS is another step towards implementing those strategies.

Shanklin - You're being greedy! There has already been a q1 trading update for 2018. You should expect regular quarterly updates from now on.

[someuwin] 26/6/2018 09:12

Excellent news today, expanding into product development and sales as well as services.

[shanklin] 26/6/2018 08:46

Last year there was a TS covering Jan-Apr. Today's RNS implies the next TS in 2018 will cover H1 - last year's H1 TS was issued on 09-Aug.

[dozey3] 26/6/2018 08:32

What do you make of this latest rns? Sounds as if the combination of household leak detection with municipal services is just starting to deliver, though there must be competition. Here in southern England leak-detection seems purely visual - water authorities wait to hear of fountains in the road and then take weeks to fix them.

[mickharkins1] 25/6/2018 14:39

I would just like to add my thanks EC! Very helpful.

[masurenguy] 20/6/2018 15:42

Yes, very interesting - cheers EC.

[effortless cool] 20/6/2018 13:44

Thanks all. Glad you found it useful.

[mginvestor] 20/6/2018 12:32

Effortless Cool,

I don't usually come on ADVFN but I had to personally thank you for the effort (no pun intended!) you've put in attending and then writing about the AGM.

I am sure I speak for many PI's when I say THANK YOU! :-)

Keep up the excellent work you've been doing.

All the best

@mginvestor over on twitter

[stopps] 20/6/2018 11:30

Good to have some feedback.Thanks EC.

[silverfern] 20/6/2018 10:41

MAny thanks EC, really useful reporting!

[effortless cool] 20/6/2018 09:34

The Water Intelligence (LON:WATR) AGM took place at 11:30 on 19 June in the offices of Weil, Gotshal & Manges, 110 Fetter Lane, London. The only representative from the company was Patrick deSouza, Executive Chairman. Two advisors from FinnCap were also present. I was the only shareholder that attended.

The resolutions were swiftly approved and the FinnCap representatives left to attend another AGM. Mr deSouza kindly offered to continue the meeting on an informal basis to discuss the company and answer my questions.

Note that this is a precis (Mr deSouza talks a lot!) of our conversation and represents my understanding of what was said. I obviously cannot guarantee that my understanding is accurate.

I first asked about the end game for the development of the corporate franchise business – how much more potential was there to grow this and how would the corporate network and the franchisee network work alongside each other in the long-term.

Mr deSouza’s view was that the market was sufficiently large and fragmented that was plenty of room for both networks to grow for the foreseeable future. He pointed out that the corporate franchises were significantly more profitable for shareholders, generating margins of ~30%, as opposed to the 6% royalty payable by the franchisees. He agreed on the value of the reliable income flow from the franchisee network, however, and indicated that he would seek to grow this from $6m per year of royalties to $8m-$10m, whilst continuing to prioritise growth of the corporate franchise network.

I then asked about the business-to-business work carried out through contracts with insurance companies. I wanted to understand how this was distinct from the normal business and why it was grouped with product and equipment sales to franchisees in the segmental analysis.

Mr deSouza explained that these two insurance arrangements came through a specific web-based channel with built-in workflow monitoring capability. It had taken two and a half years to convince the first insurer to sign up for this arrangement but, having now proven the concept, he had high hopes of scaling up this side of the business further, both in the USA and potentially, internationally.

I had assumed that the business-to-business channel was lower margin than normal business; however, Mr deSouza corrected me on this. The insurer paid the standard charge for the work carried out plus a fixed fee for each case. This was attractive for them because the plumbing market is so fragmented that it worth paying extra for access to a reliable service provider with close to nationwide coverage whose employees had all been subject to criminal records checks and other relevant controls.

I also asked Mr deSouza to consider making some enhancements to the financial reporting, specifically:

• Including like-for-like data on segmental revenue. This is particularly important to show the underlying performance in the highly acquisitive corporate franchise segment.
• Including cost of sales data in the segmental analysis, to enable investors to calculate gross margin at segment level.
• Issuing preliminary results on a fixed date, rather than fully audited results at a late date that has generally been missed. Mr deSouza highlighted the complexity and length of the audit process, due to the franchisee structure and the multi-national nature of the business.

I also flagged to Mr deSouza that the implantation of MIFID II meant it was now very difficult for private investors to access the FinnCap research on Water Intelligence, and asked him to consider commissioning regular ‘paid for’ research.

Mr deSouza was receptive to all of these suggestions although, to be honest, I don’t expect to see any improvement in the timing of the issue of the final results.

Overall, Mr deSouza was very bullish on the prospects for the company, and I remain a happy holder.

[silverfern] 19/6/2018 16:05

Very nearly joined you, but I needed to give 7 days notice to attend apparently so my broker decided not to send me a rep letter. Next time. WHen I've spoken to companies in the past i have asked if they would mind me sharing x or y on bulletin boards. I would be v interested to know what other investor types were there and their level of engagement/enthusiasm.

[effortless cool] 19/6/2018 12:47

A very interesting AGM today. I was the only shareholder there and Patrick deSouza was very generous with his time in talking about the business and answering my questions.

I'll write up a summary and post it when I get the chance, and will also update some of the information and projections in the header.

[silverfern] 19/6/2018 08:25

Needless to say we'd be grateful ECV for your thoughts following today's AGM.

[someuwin] 14/6/2018 09:50

Keeps moving up.

[from8to800] 13/6/2018 17:17

For my part just thank them for the 100%+ gain.

[effortless cool] 13/6/2018 10:32

AJ Bell Youinvest (see 150). I've been using them for four years now and found them very good.

I will raise the issue of missing reporting dates. I have plenty of other questions myself, but if anyone wants to suggest anything here, I can add it to my list.

Good timing on your latest buy, btw.

[silverfern] 13/6/2018 09:53

EC which broker? i reported above the useless response I got (because my shares are in nominee hands also) from WATR PR company when I passed on your concern about missing results days. You can now raise it with the company direct anyway! Btw, bought more last week so good to see this rise.

[someuwin] 13/6/2018 09:06

Moving up ahead of next week's AGM

[effortless cool] 12/6/2018 21:45

Letter of representation has arrived - well done, AJ Bell.

[effortless cool] 12/6/2018 14:55

I will do that if the broker does not come through.

[kazoom] 12/6/2018 14:54

Have you been in touch with the company themselves?

Often they will be prepared to admit you anyway - although you'd need the proof if you want to vote.

[effortless cool] 12/6/2018 13:40

I'm trying to arrange it. My shares are in a nominee account, so I need a letter of representation from my broker. they have agreed to provide this, but have not yet done so.

[silverfern] 12/6/2018 13:25

AGM one week today. Anyone going?