I have been following this train wreck for some time and thought it may prove an interesting lesson in disclosure and failed execution to review P2P's announcements re digital taxi tops. If you are interested check-out the announcement review below after the questions.
At the very least P2P need to answer some questions re digital taxi tops.
·Is P2P taking legal action against CV Services Group for screen issues? At what cost and to what end?
·What is the status of the Telstra agreement? Currently $17m over 3 years.
·What is the breakdown for the $2m Adflow impairment announced in Aug-19?
·What was the result of the DOOH RFP announced in Aug-18?
·What is the latest revenue, gross profit and EBITDA model for digital taxi tops (assuming they are working)? Based on what assumptions? See previous question re DOOH RFP outcome.
6 April 2018
·Mobile digital advertising brings new revenue stream
·Launched 6 months ahead of schedule (This is hysterical given Friday's announcement. Yes they LAUNCHED digital taxi tops almost 2 years ago and said they were ahead of schedule!)
·2 years spent designing and developing the taxi tops (Plus another 21 months since this Apr-18 announcement and the screens still aren't working.)
·CV Services Group Exec Dir, Ed Phelan "Our extensive experience in signage manufacturing techniques and in the digital space gave us a unique advantage in partnering with the P2P Transport team to overcome the many challenges faced in bringing this product to a market ready stage". (Clearly Ed jumped the gun. He did get “challenges” correct.)
·Expected roll out to 900 vehicles (No date specified.)
26 April 2018
·Negotiations underway to secure an advertising partnership model in anticipation of full market launch in early FY19 (Hang on I thought they launched 20 days ago? Exactly how do you launch an advertising network without someone to sell advertising?).
·P2P Transports MD, Tom Varga "Adflow Digital taxi top is a great example of accelerating the strategic roadmap." (Looks like Tom jumped the gun as well. Did someone say challenges?)
15 May 2018
·Deployment of Adflow digital taxi top advertising remains on target. (Good to read nothing has changed in the 2 weeks since the last update.)
31 July 2018
·Commercial discussions with strategic partner on Adflow Digital taxi tops for funding, telecommunications and strategic relationship advancing ahead of expectations. (Hang on I thought they announced launching the new digital advertising revenue stream 6 months ahead of schedule, 3 months ago?)
·Remains on track to launch initiative to the market in FY19. (Hang on what happened to early FY19 promised in Apr-18 and confirmed in May-19? On-track = early FY19.)
1 August 2018
·FY18 results update
·Additional costs incurred by the business coupled with weaker trading conditions in the last two months of the year have impacted underlying EBITDA margins.
·One of the factors that have had a key influence on the FY18 results is - R&D costs to accelerate the launch of Adflow Digital (taxi top advertising) by 12 months. (Hang on I thought they said they were 6 months ahead of schedule in Apr-18, now they are 12 months ahead of schedule? Also are R&D costs being expensed or capitalised? How much did they expense/invest/incinerate on R&D over 3+ years? Why wasn’t the cost to accelerate (hysterical) the launch of Adflow Digital disclosed in Apr-18?)
·FY19 EBITDA guidance 50% better due in part to deployment of the Adflow Digital solution in the second quarter of FY19. (So much for early FY19 but 50% better FY19 EBITDA!)
Also 1 August 2018
·P2P Transport enters mobile digital out of home market
·Strategic partnership with a major telco for both funding, telecommunications and implementation of 900 Adflow Digital taxi top units. (Interestingly there was no quote in the announcement from the major telco. No details on the strategic partnership?)
·Also announced the acquisition of Fare Media to provide a direct sales and marketing channel for Adflow.
·As identified in the IPO a RFP will be open to all DOOH operators over the coming weeks and will run in parallel with the direct marketing to major brands and advertisers. (Ok great they are going to get DOOH operators to sell advertising on the digital taxi tops. Why wasn’t this process started on launch in Apr-18?))
·Adflow Digital is expected to be operational in Q2 FY19 with a forecast EBITDA of $2.25m, or an annualised EBITDA of $4.5m. (So should we assume operational by the start of Q3 FY19 and therefore $2.25m in H2 FY19 * 2 = $4.5m annualised? How have they modelled EBITDA before engaging DOOH operators to sell the advertising?)
·Fare Media is forecast to deliver an annualised EBITDA between $640k and $1m. (Is this in addition to Adflow Digital's EBITDA? Answered in 31 Aug-18 announcement)
31 August 2018
·FY18 results and outlook for FY19 Investor Presentation
·Poised for Growth - Adflow digital taxi tops expected to be launched in Nov-18 with an initial fleet of 300 vehicles. (So early FY19 missed. So much for 12 months ahead of schedule. No explanation.)
·Funding secured for…the deployment of 900 Adflow digital tops through a major telecommunication company. (Still no details?)
·Combined (Adflow Digital taxi tops and Fare Media) the initiatives and acquisitions expected to deliver…approx. $5.4m on a full year basis (Earlier question answered.)
·Adflow in action YouTube video. (As at 18 Jan-20, 290 views. The advertisers are clearly lining up….NOT.)
18 September 2018
·P2P and Telstra partner in digital taxi top delivery
·Three year partnership worth $17m (WOW! Big investment!) delivering P2P digital taxi tops, mobile communication and a range of support services. (Hang on P2P is paying Telstra $19k per taxi top over 3 years! Fare Media is going to need to sell some serious advertising to get a return on this investment. P2P must be getting inundated with interest from their DOOH RFP to justify this investment.)
·P2P expects that payments to Telstra will be made from advertising cashflow over the course of the three year period. (Ok…spoiler alert, what happens to paying Telstra when the first 300 taxi tops don’t work and P2P suspend operations?)
·“The partnership will see 300 screens rolled out on taxis initially, followed by a further 600 screens over the next three years.” (Shareholders better hope no-one ordered the remaining 600 screens and P2P doesn’t have to pay Telstra for them.)
22 October 2018
·2018 Annual Report
·Adflow is rolling out over 900 vehicles in FY19. (Hang on the Sep-18 announcement 1 month earlier said 900 screens over three years. Which one is it?)
·Chairman’s Letter – “Adflow digital taxi top advertising and the acquisition of Black & White cabs are two highlights of strategic business growth positioning P2P Transport to capitalise on revenue and cost efficiency opportunities…” (Let’s double-down) “…the launch of Adflow [are] showing promising results for the business…” (Really? How is it possible for Adflow to be SHOWING promising RESULTS and a year later the screens still aren’t working? Someone order Chairman Reynolds a taxi he is outta here.)
·CEO’s Report – “Secondly, the launch of Adflow digital taxi top advertising and the unique partnership with Telstra completes the strategic expansion of P2P. (That’s a relief for shareholders.) With a target of 900 units to be installed over the next 12 months the initial 300 units will be deployed before Christmas 2018…Rollout of additional units will be balanced with advertiser demand over the coming 12 months.” (Hold that taxi Reynolds, CEO Varga needs a lift.)
·P2P acquired Fare Media for a total consideration of $100,000 is to be settled in shares. (Wow this seems like a crazy cheap price for a company that is forecast to directly deliver annualised EBITDA of $1m and indirectly $5.4m in EBITDA! Really?)
22 October 2018
·AGM Notice
·Resolution 3 - 4,364,000 shares issued to Greg representing $4.1m @ $0.94 per share. (Context on the train wreck damage. Clearly Greg was drinking the Kool-Aid. In Greg’s defence he must have bought into P2P’s vision which clearly included a jackpot from digital taxi tops. Is he still a believer? Based on Friday’s announcement it appears he is.)
31 October 2018
·Quarterly Activities Report
·Adflow on track for Christmas launch. (Remind me again what exactly was launched in Apr-18 six months ahead of schedule?)
21 November 2018
·AGM – Chairman’s and MD’s Address
·“Adflow plays a critical role in the FY19 performance of the business and I am pleased to report that we have commenced installation in Sydney, Melbourne and Brisbane…Deployment of the initial 300 units is expected to be completed before Christmas. In the coming weeks I am looking forward to sharing more information about the success of the platform and providing more context to the revenue the solution will deliver.” (Yes please.)
28 November 2018
·Non-Stop Media Acquisition
·All cash consideration (interesting they didn’t get paid in P2P shares). Minimum $600k up to maximum $1.2m. (6 to 12 times as much as Fare Media?) Subject to achieving cumulative revenues for 11 months ending 1 Nov-19 of $2.4m. (So is this revenue for existing static and/or new digital assets?)
·Targeting revenues up to $3m for FY19. (What was Non-Stop Media’s existing static revenue before the acquisition?)
·The addition of Non-Stop Media’s sales team and customer base is expected to further support the ramp-up of Adflow revenues into H2 2019. (Hang on I thought P2P bought Fare Media to “to provide a direct sales and marketing channel for Adflow”? Who has been responsible for the “extensive business development activities into the advertising market” up until this acquisition? Is Fare Media not working out after 3 months? Also what happened to the DOOH operators RFP announced in Aug-18? Is it possible that DOOH operators told P2P they couldn’t sell enough taxi top advertising to justify the $17m investment and P2P failed to advise shareholders? Was Non-Stop Media the only interested operator?)
18 December 2018
·Business Update
·Adflow – Targeting rollout of 600 digital units during FY19. (Wow it is hard to follow how many units will be rolled out and when as the targets keep changing every few months but hey it is one week before Christmas so they must only have a few remaining screens to install from the initial 300 promised so they should be getting pretty good at predicting install targets…)
·Non-Stop Media and the launch of Adflow digital taxi tops to generate an additional $3m EBITDA in H2 FY19. (Ok let me work through this…in Aug-18 shareholders were told Adflow H2 FY19 EBITDA would be $2.25m + Fare Media $640k to $1m = approx. $3m. This relied on 300 screens installed by Christmas. Ok so assuming 25% EBITDA P2P / Fare Media / Non-Stop Media was going to sell $12m in advertising from a standing start for H2 FY19. Ambitious but hey, go Fare Media and Non-Stop Media! Hang on what EBITDA is Non-Stop Media contributing to H2 FY19? Why is P2P paying up to $1.2m in cash for Non-Stop Media if they aren’t contributing any EBITDA?)
·Initial 300 digital tops to be installed as of December 2018. (Interesting wording…not exactly we have installed and tested 295 digital tops and we have 5 left to do next week.)
·Negotiations underway with key media houses and brands. (Do key media houses = DOOH operators? What was the result of the DOOH RFP announced in Aug-18?))
·Secured first Adflow digital taxi top advertising customer.
·Targeting to install 900 digital tops on P2P owned vehicles during FY19. (Wow they managed to contradict themselves in the same presentation! Headline said 600 units in FY19.)
·See graph with actual installed units per month for Nov-18 till Jun-19. (Apparently 150 screens were installed in Nov-18 and if there were any issues they were not deemed critical enough to mention in this update.)
·Adflow and Fare Media is anticipated to deliver $2.84m in additional EBITDA in FY19, or $5.44m on a full year basis. (So using the 31 Aug-18 guidance Non-Stop Media is contributing $3m minus $2.84m = $160k EBITDA? Sure pay them $1.2m cash and Fare Media $100k in shares for delivering $640k to $1m EBITDA. Go figure?)
31 January 2019
·Quarterly Activity Report
·Successfully launched Adflow Digital in Melbourne (November) and Sydney (January). (I think it is safe to assume that after 3+ years in development successful = tested and works.)
·Strong growth in Adflow revenues since December, currently 129.2% ahead of internal budget. (So Jan-19 is ahead of budget. Pop the champagne!)
·All digital advertising units have been delivered. (WTF does this mean?)
·A total of 100 units are now operational and it is expected that the remainder will be completed by March. (WTF!!!!! You told shareholders on 18 Dec-18 that 150 units had been installed in Nov-18 and 300 would be installed by Dec-18!!!!)
·The Company has already secured over $2m in advertising in the year to date. (What YTD? FY19 or CY19 being 1 month? Digital or static residual revenue from Non-Stop Media?)
·Quote from CEO Varga “Additionally, the remaining Adflow Digital Taxi Tops have now been delivered and installation will be completed during February.” (Again they managed to contradict themselves in the same announcement! Feb-19 or Mar-19?)
22 February 2019
·Acquisition and Capital Facility Completed
·Adflow, both digital and static, has successfully grown the overall market having achieved a run rate of annualised sales of approximately $4.5m based on March contracted sales. (Hang on Non-Stop Media was due to contribute $3m p.a. in sales from static taxi backs does that mean that sales for 300 digital screens is worth $1.5m p.a.? P2P needs to pay Telstra $5.67m for 300 screens over 3 years = $1.9m p.a. less $1.5m p.a. sales = $400k p.a. gross loss before operating costs!)
28 February 2019
·Half Year Results Presentation
·Adflow successfully launched – Deployment of initial 218 digital taxi tops (Ok so deployed means delivered and not installed or operational? Seriously?)
·Non-Stop Media (acquired Dec-18) performing ahead of management expectations. (Very reassuring after 2 months.)
·“Since launch (remind me again was this Apr-18?) demand for taxi advertising has been stronger than expected…sales of digital taxi-top capacity tracking to expectations.” (You heard it here folks $3m+ EBITDA H2 FY19 with only 4 months remaining, here we come.)
Also 28 February 2019
·2019 Half Year Results Presentation
·Adflow – Installed digital taxi-top units as at period ending 31 December 2018 = 218 (Installed or deployed? 31 Jan-19 announcement, “A total of 100 units are now operational and it is expected that the remainder will be completed by March.” Jesus this is confusing.)
·Adflow revenue contributed $600k following launch of digital taxi tops and acquisition of Non-Stop Media in December 2018. (Anyone want to guess the revenue contribution between Non-Stop Media (1 month), Fare Media (5 months) and Digital taxi tops (1 month)?)
·High margin offer with gross margins of 81% and underlying EBITDA margin of 46%. (Wow after 1 month of actual sales P2P is telling shareholders that they have modelled 81% margin and 46% EBITDA to generate $3m H2 FY19 EBITDA. What DOOH operator told them they will generate 81% margin? Are the results in from the 1 Aug-18 “RFP will be open to all DOOH operators over the coming weeks” to justify this model?)
·Complete initial roll-out (delivered, deployed, installed or operational?) of 300 digital taxi tops during 3Q FY19 (so much for Christmas) with an additional 300 expected by 2Q FY20. (Hang on what happened to 900 units in FY19 promised in Dec-18?! What impact will these delays have on $3m EBITDA for H2 FY19?!!!!)
17 April 2019
·Trading Halt (What could possibly be wrong?)
23 April 2019
·Quarterly Update and Trading Update and Board and Management Changes
·Adflow Q3FY19 revenue was up 191% on Q2FY19 despite performance of Digital Taxi Tops. (191% up on $600k = $1.15m. Isn’t this just residual revenue from Non-Stop Media static assets? As per earlier question anyone want to guess who contributed what revenue? Sorry did someone say something is wrong with Digital Taxi Tops?)
·During Q3FY19, P2P continued its roll-out of Digital Taxi Top units with approximately 220 units deployed as at 31 March 2019. (Here we go again….I give up.)
·During February and March, the Company identified a technical issue affecting unit performance relating to heating issues when a taxi was idling in a rank. (Did someone say 3+ years R&D on these units? What does R&D mean at P2P?)
·While this issue has now been resolved (great…really?) it resulted in a delay to expected revenues to Adflow (HOW MUCH?!) and one-off remedial costs totalling $700k being incurred during the quarter. (Hang on why is P2P paying to remedy a defect with the units?).
·CEO Varga and Chairman Reynolds have resigned effective immediately. (Surprise, surprise. Anyway great news, management gets to wipe the slate clean, blame Reynolds and Varga for everything (let’s forgive the directors who haven’t resigned) and update the shareholders.)
20 June 2019
·Trading Halt (Not again….)
24 June 2019
·P2P’s business continues to perform soundly albeit below its potential (New CEO Webb is obviously a glass half full guy.)
·Revenue from digital top Adflow has been impacted by technical issues with the digital top system and battery charging. Whilst this issue has now been resolved (very reassuring to read new management confirming the issues have been resolved) Adflow revenue for FY19 is at the lower end of the forecast range. (Which is what, because if I read back through the last 12 months’ announcements it is difficult to find any Adflow revenue forecast “range”. Anyone? It is extremely disappointing P2P’s new board didn’t take this opportunity to supply clear updated guidance.)
·“P2P is continuing to leverage our platforms to sell additional revenue streams with Adflow being a good example of our capabilities (they really didn’t just say that did they?) and we are working hard to grow this business unit to become one of our largest most profitable business units. (WOW! Ditto my last question.) The digital tops roll out has recommenced following the solution to the systems battery issue. We expect all 300 digital tops to be on vehicles and operational by the end of July 2019.” (Further slippage and again no clear update on $3m H2 FY19 EBITDA and there is only 6 days left in H2! Surely Telstra is still being paid?)
28 June 2019
·Fare Media issued 333,334 shares at $0.30 each. (Ouch. Now worth $20k. Is any of the talent hanging around to sort this disaster out?)
31 July 2019
·Quarterly Update
·No mention of Adflow’s H2 FY19 performance. Installs? Revenue? Telstra costs? $3m additional EBITDA? If they know they aren’t sharing.
31 August 2019
·Preliminary Final Report for the Year Ended 30 June 2019
·Impairments totalling $8.5m (wow) relate to goodwill and the value of Adflow’s Digital Taxi Tops. (Hang on how much relates to the digital taxi tops and why are they writing this off? I can see a $4.1m impairment? Is this it? Unbelievably there is no note in the accounts in relation to this impairment! I can see a $2m impairment to motor vehicles and a $2.1m impairment to equipment. Is equipment digital taxi tops? How many? What is the status of the Telstra deal? I thought the revenue was just delayed? Two months ago P2P’s new board said that Adflow was the future?)
·Advertising FY19 Revenue = $2.3m (Residual static advertising? Anyone want to guess the break-down?)
1 October 2019
·Suspension from ASX
1 November 2019
·Quarterly Report
·No commentary
8 November 2019
·Annual Report and Reinstatement to ASX
·Adflow revenue $2.3m and Operating Profit $696k. (Not exactly a 46% EBITDA margin. Less finance costs and depreciation and Adflow makes a loss of $35k. P2P’s future looks bright.)
·Adflow Impairment $2m (There it is. Still no explanatory note. Extremely disappointing but no surprise.)
·Adflow Capital Expenditure $5.95m ($17m divided by 900 times by 300 = $5.67m? How many screens has P2P ordered and paid for? Are Telstra finance, network and support charges additional?)
20 December 2019
·AGM CEO’s Address to Shareholders
·“There was a lot of optimism around the digital taxi-top advertising revenue. (Yep.) This has not eventuated due to technical issues with the taxi-tops and the subsequent brand damage. Management is particularly focused on resolving these issues from both the performance and commercial aspects.” (No guidance update. Shareholders are left to guess. What will it take for P2P to realise this $17m investment is a loser?)
17 January 2020
·Company Update Adflow Digital Taxi Tops
·“P2P has identified further technical issues with its 300 Digital taxi Tops and as a result….P2P looks forward to recommencing operations of Digital Tops once the supplier rectifies the technical issues being experienced.” (Really?)
·“The Company is expecting the suspension of operation of Digital Tops will NOT HAVE A MATERIAL EFFECT ON THE FINANCIAL PERFORMANCE OF THE COMPANY as historical revenue levels from Digital Tops have been minimal.” (CEO Webb drops the mic...)
