(RAM) RAM Active Media

So how would a customer like First Great Western approach this sort of retrofit programme?

Mark Edmonds: As you can well imagine their programmes are based on when they can get hold of their fleet because they can’t take all the fleet out at once. First Great Western has got 1000 carriages. It’ll do 50 this year – and that’s the basis for the way they plan their maintenance or refit. So it comes to pass, as we all know, that if you’re putting in a source code and a backbone into a train on part of their fleet you’d like to think that they would keep some sort of uniformity throughout the rest of the fleet otherwise the carriages wouldn’t be talking to each other. So if you win on one, the assumption is that you’ll do the rest of their fleet because the idea is that it is a straight pollination from one carriage to another. If you actually win contracts with the major train operators you can then begin to try and piece together how big the opportunity is in this field.

In terms of the near to medium term, what are your expectations for these two businesses?

Tim Baldwin: If you look at TrainFX, its research and development started in the early 2000s in terms of designing product for the rail environment, which is a very tricky environment to work in because it works on totally different electricity aspects in terms of voltage and security and all the rest of it. So there has been quite a lot of prior investment, before we even got involved, in establishing the suite of products. We could see, when we bought the business, that they had got the first letter of intent from First Great Western but hadn’t actually quite signed the contract. We acquired 50% of the business in May last year and took management control. In November last year they won the First Great Western contract. We followed up with four other contracts and now we’re looking at a pipeline of potential orders of £78m. So you can see the scale. The company, in the final quarter of this year, should have gone into profitability and we’re looking at a profitable business going forward into 2011 and then building up. There is a certain amount of operational gearing in this business in that the core technology team of eight people does not need to be scaled up to cope with much higher volumes of business and that’s the principal overhead. We will require more contracting sub-assembly people, which are relatively low skilled, but that will be on an as-needs basis and the majority of the equipment is outsourced to major manufacturing companies for electronic component and/or engineering fabrication. The installation work is done by a partner company that is used to going on and off trains.

So the summary of where we are is that we’ve got a high margin product sales business with a big growth market, limited suppliers, worldwide potential and we’ve just kicked off. We appear to be entering the market at a time where regulation is forcing companies to do this type of work, as I say where there’s limited suppliers, and where you have a very scalable business from a profitability point of view.

Do you see a lot of scope to roll this out in other countries?

Tim Baldwin: Yes because there’s rolling stock all around the world obviously and we’re already in negotiations with overseas distributors that want to introduce our product to those markets. One of the things that is worth mentioning is that there are such huge safety standards and barriers to entry, if you like, in entering this market from a third party point of view. In term of entering third party markets, there is also a knowledge in the railway industries of India or wherever it might be, that if a system has passed the scrutiny of the UK rail authorities then you’re a long way down the curve. But the scale of the UK market alone is a very, very exciting prospect for our business. The scale of the worldwide market obviously is very, very substantial but we wouldn’t be looking for global domination by

Not surprising since projection floor business' in malls died a long time ago. Looks like they overpaid for the company as well. Makes you wonder if they are not doing as well as expected on the mall side.

but it looks like no one is interested to buy their share not at even 1.2 p

7:17 am
The Times
http://bit.ly/pbxhsH

Deal of the day: RAM Active Media jumped 12.5% to 1.125p, after buying Brandplay, the Owner of digital advertising sites in 11 shopping centres across the U.K. The AIM-listed company, a specialist in outdoor marketing and passenger information displays on trains, issued 6.5 million new shares at 2p each through its broker Libertas Capital to pay for the acquisition.