old news but...

By Ian Porter
May 15, 2006

IT HAS been a frustrating six months for Mark Pallister, former chief executive of Quiktrak Networks, a company he has brought back from the dead.

Quiktrak's new transponders were delayed four months, the interim results were blighted by a non-cash write-down of $13.6 million, and the Australian Securities and Investments Commission finally filed its fraud charges against Mr Pallister.

The charges were filed in April and Mr Pallister has pleaded not guilty, pointing out that the issues have already been tested twice in civil cases and resulted in no adverse findings.

Although the charges have no connection to Quiktrak, he decided to step down as managing director when the charges were foreshadowed late in 2005.

Now working as a consultant for Quiktrak, he has been travelling the world trying to secure the radio frequencies needed by Quiktrak's unjammable car tracking and asset security system.

It was a change of plan in China, which had awarded the company an initial $US380 million ($A505 million) contract, that prompted the four-month delay.

Quiktrak's distributor, China Alarm Holdings, wanted to extend the network across the whole of Hubei province, which could mean a further 3 million transponder sales, Mr Pallister said. But they needed a new radio frequency, and waited while the Chinese Government found one that was available right across the country.

He said the China delay prevented the message getting out about Quiktrak's earnings potential for another six months, although he is still confident it will be worth the wait.

"We turned over $4 million and made an operating loss of $700,000 in the December half, before the write-down," he said in Melbourne recently.

"Some people think we will need to raise revenue to $8 million to break even, but they don't understand the business model. If we get to $8 million, we will be making $3.3 million because all the extra revenue drops to the bottom line."

Now the new transponders were in production, the company was signing up customers in Australia at the rate of 350 to 400 a month, Mr Pallister said. Each pays $1199 to sign on and $399 a year for ongoing monitoring.

But while the exotic car market has been good to Quiktrak in the past — insurers now will not insure a Ferrari or a Porsche unless it has a tracking system fitted — Mr Pallister has his eyes on a bigger prize, home security alarms. "There are 15,000 monitored car systems in Australia, of which Quiktrak has about 50 per cent. But there are 1.4 million monitored home alarms, and we are launching our system into the market in June."

It is wireless, can be installed by the home owner and, unlike other systems which use global positioning systems or phone technology to get the alarm out, it cannot be jammed.

"Most people spend a large amount of money to protect their homes without realising that a $250 scrambler from the electronics store can make their security system useless."

The size of the home security market dwarfs the exotic car market. Even a 5 per cent market share would be eight or nine times the current car-tracking portfolio, Mr Pallister said.

"If we can't get the Australian operations to 100,000 transponders in three or four years, we have not done our job correctly."