Tag: Tracsis

Rio Tinto AGM and Tracsis Results Webinar

I attended two webinars today. The first was the Rio Tinto (RIO) Annual General Meeting. This was a hybrid meeting run via the LUMI platform for on-line attendees (including on-line voting) although there were clearly a few shareholders in physical attendance. It was well organised.

There were good speeches from the Chairman and CEO who reported this was there third year with no fatalities – quite an achievement for a large mining company. This company is of course one of the largest mining companies in the world with a focus on copper, iron ore, nickel and lithium. There were record profits last year based on higher commodity prices and they paid out the biggest dividend ever of $16.8 billion.

It was stated that “respect for people and land is at the heart of our community” and there were multiple references to first nation people.

When it came to questions, one shareholder commented on the excessive length of the Annual Report (now 420 pages) which reinforces my comments in a previous blog post on this issue. He also requested that text be in b/w and not in multi-column format – to assist on-line reading no doubt. A good point.

Most of the questions were on environmental concerns about projects in Madagascar, Arizona, etc, so after 2 hours I switched to watching a webinar from Tracsis. There really needs to be some way to stop AGMs being dominated by environmental groups who are unable to keep their questions short and to the point. A time limit per question would be one way. And most of them would be better answered by written responses and by meetings with the CEO, for which they had apparently been given an opportunity.

The company is clearly paying a lot of attention to ESG issues anyway.

Tracsis (TRCS) is a rail technology company in which I hold a few shares. They reported interim results yesterday which were good – revenue up 31%, adjusted EBITDA up 14%, and dividend up. This was a PI World event which was well organised.

It was stated their objective is to increase recurring revenue which is something I always like in a business. There was discussion of the US rail market and the recent acquisition of Railcomm which gives them a good base from which to expand in what appears to be a very fragmented market for similar technology solutions. They are clearly intending to pursue M&A opportunities there.

I did not learn a great deal more but the CEO spoke fluently and the company clearly has growth ambitions. It was less impacted by the Covid pandemic than one might have expected last year when there was a significant reduction in rail passenger volumes and events were cancelled.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Market Bounces, But It’s Not on Good News

The FTSE-100 is up 2.5% today at the time of writing, and my portfolio is up 5.5%. There are several stocks in there that are up more than 20% but the bad news keeps coming so this seems to be more a case of folks picking up stocks that have fallen to very low levels and moving into defensive ones than on any really good news. The impact of the virus in the UK is still growing and business is grinding to a halt.

The bad news today was 1) From Rightmove (RMV) who said “Notably the number of property transactions failing to complete in recent days and likely changes in tenant behaviour following the announcement of the renters’ protections by the government may put further pressure on estate and lettings agents”. They are knocking 75% off their customer invoices for the next few months which will mean a hit of up to £75 million to revenue! Better to have some revenue than have agents cancel seems to be the logic. The share price is down 4%. 2) From Tracsis (TRCS) a provider of services to the rail industry who say: “Given that the situation is changing rapidly, at this point in time it is not possible to accurately quantify the impact on H2 trading and therefore full year expectation”. A lot of their revenue is recurring in nature but they will be impacted by the cancellation of events. The share price is up over 2%, presumably on some relief that it is not as bad a prognostication as many companies are issuing.

I do hold those stocks but one I do not is Next (NXT) the retailer. They have received compliments in the national media about their recent announcement which gave some very detailed forecasts of how they would cope “in extremis”. I still doubt this is a sector to get back into because wages in many sectors of the economy will be depressed which will surely hit retail sales even if they are able to venture back into the shops or shop on-line. When the economic outlook is uncertain, people stop spending money also.

For Sirius Minerals (SRX) shareholders, ShareSoc has issued a very well judged blog post on possible legal claims – see https://www.sharesoc.org/sharesoc-news/sirius-update-9-14-march-2020/ . Regrettably there have been some hotheads who wanted more action and sooner, which was not practical, and some who think ShareSoc is raising false hopes. Neither is the case. As someone who has in the past run shareholder action groups, I have learned that quick actions are neither sensible nor practical. But legal cases for redress are sometimes possible – for example in the case of the Royal Bank of Scotland rights issue in 2008 and the false prospectus. But it can take years to raise funding and reach a conclusion. Persistence is everything in such circumstances. But rushing into legal action, however willing lawyers are to run up fees on a case, is not sensible.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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CEO Quits, Should I Sell Tracsis?

It is always disturbing when the CEO of a successful investment quits out of the blue. That’s what has happened at Tracsis (TRCS) today. John McArthur is departing in the “first half of 2019 to focus on family and other non-business matters outside the Group”. That’s after 14 years of growing the company. I have held the shares since January 2013 with a compound total return of 21.8% per annum. Thanks John.

A replacement CEO has already been lined up in Christopher Barnes, previously with Ricardo. The Tracsis share price is down slightly today, at the time of writing.

In such circumstances I tend to wait and see if there is any impact. Good companies can survive a change of management and 14 years is a long time for anyone to stick in the same job. Boredom and desire to do something else are the symptoms and as companies grow the bureaucracy becomes more onerous.

A change of CEO can actually be a positive move if well executed as it helps to bring new experience and ideas into a company. Will just have to keep our fingers crossed on this one.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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