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For cash burn and the break even target it’s all about monthly income and the headline revenue figure in the 2014 results doesn’t tell you the actual monthly burn rate at the same point in time, Dec 2014 Total Admin, Marketing and R&D costs in the full year to Dec 2013 were about £3.9m The same figure for the above in the 2014 results released yesterday was £6.26m, that’s a yearly increase of about 60% in costs …… so far so bad. Annualised recurring revenue (that’s the revenue figure relevant to present monthly cash burn) was £870k at the end of Dec 2013 Roll on 12 months to Dec 2014 and ARR had grown 247% to £3m, so a 60% rise in costs helped to grow ARR by 247% There was an average of 521k in costs per month in 2014, the 2014 year end monthly gross income figure would be around £175k (a 247% increase) using a 70% gross margin figure, so a net monthly loss of around £346k to start 2015 Using the same 70% in gross margin means monthly gross income has grown to around £200k in the two months to the end of Feb, hence I think cash burn is around £250k to £300k per month now (I,m using the higher figure) …… so far so good and every decent up tick in revenue during 2015 should see a decrease in the monthly cash burn. The working cap part of the placing plus cash left in the bank should get them through if the growth continues and if the Sales and Marketing placing cash maintains or betters the growth both in the UK and US then all will be ok …… if not ….. then, well I did say “should” As I’ve said already the KPI’s will be watched even more closely now. These companies are very high risk, but if they pull it off then expect very high reward …… or bust if they don’t, but this one has a great product, anyone can download it from Google Play and try it free for 14 days Anyway I saw more positives than negatives in yesterday’s news once I got over the placing kick in the nether region
Not for long I suspect Jollers. Not for long….
I would argue that cash burn is still likely in excess of £250-300k. It was roughly 50% higher than that up to the end of last year and costs were rising faster than revenue and since we hear nothing from the company of reining in costs (more the opposite). For proof of this read the following comments from RNS where it refers to further sales, marketing, expansion expenditure blah blah blah. No talk of costs control there. Its all about the growth baby! By the way do you actually believe the reasons they gave for doing the placing? Lets suppose they were almost out of cash and they have further BS liabilities arising by this Autumn how long until the next placing I wonder?
so far, the market agrees with you...gl
There is no arguing with the gloomy, doomy tone of the BB after that hefty discounted placing (even more hefty when factoring in the drop from £2 when they obviously started putting the placing feelers out), so I won’t bother. The KPI’s on the other hand are still looking very strong and a yearly recurring run rate of £3.46m at the end of Feb this year should mean Monthly cash burn is down to somewhere between £250k and £300k based on a 70% gross margin (just my rough calcs, so could be way out, DYOR) Not sure when they forecast break even to be, as I haven’t seen it mentioned, but providing the growth remains as strong as last year I would have thought breakeven should be achievable in early 2016 Once breakeven is achieved, then as with Outsourcery (ever the optimist!) the operational gearing should see profits grow quickly So on the whole a disaster of a placing which gave a good old kick in the danglies is eased by the high growth rate with great gross margins Future KPI’s are a more relevant watch now. All the above IMO, DYOR
OK we see Paul Williams has gone into the market this morning and bought £10k's worth at 97.5p. Great eh? NO. Ridiculous. Why the hell didn't he buy any in the placing? None of the directors purchase and sustain their stakes and then one of them goes in and buys at a premium of 7.5p? Is that supposed to invoke confidence? It smacks of no-idea incompetence to me. I'm sure these guys will say 'damned if we do damned if we don't' but seriously they need to sort this mess out. It's all got far too comfy at Synety. The idea of a successful business is to focus on the bottom line and make money. Not to go round slapping each other on the back and talking about what you're going to be. Its all gone to your heads boys. I won't be considering investing here until I see tangible evidence that management are managing the companies finances prudently and diligently, like they would with their own money.
looking a little...high & dry?
how can they justify not buying £100ks more shares @90p...they reckon still too expensive? More placings on the cards? ...PIs should have clear explanation of why! ..gl to all holders, but I reckon I'll have the opportunity to buy in either a lot lower and/or at a less risky time (most obviously if/when it is finally clear they can turn a penny, not just spend spend spend) ...amazed opinion only
They've even paid themselves £181,000 bonus. I love AIM.
The remuneration of the three top dogs alone represent 48.31% of the gross profit. This is a life style company and nothing else. Bloody joke!! I hold no shares here.
Nice summary by Pauly Pilot on Synety and one I concur with. Shame about the placing being at such a low price, clearly no appetite from the big funds for it. However opened up a nice buying opportunity at 90p. Buy now......tuck them away and come back in 18 months is the game here.
Oh and THREE QUARTERS OF A MILLION QUID in fees! Someones taking the mick here big time.
Quote from Placing RNS: "The total amount that the Company could raise under the Issue is £3.57 million (before expenses), assuming all the Open Offer Entitlements are taken up. Neither the Placing nor the Open Offer are being underwritten and accordingly, as set out below, the minimum proceeds under the Issue are approximately £2.82 million (before expenses)." OK, before expenses, which is it Mr Cleaver?? I think we can work it out but seriously doesn't any one proof read and check this stuff before it goes out to market? You can say it doesn't matter but it DOES matter because it reinforces a view of competence and trust to get simple things like that correct. They cocked up on a previous RNS and they cocked up on this one too. Reissue it SNTY and get it RIGHT in future!
and extraordinary that they can pursue their lifestyle without putting more skin in the game
You don't have to glance very long at the Income Statement to see where the problem is here. The company burns cash at an alarming rate. Living well beyond its means. For example, every £1 of Revenue is matched virtually pound for pound by Sales and marketing expenses ALONE. Thats before we even get onto Administration Expenses! Nearly £4m worth and how many people do they employ? 40, 50 maybe? Theres the problem, they have NO control over costs and whilst I appreciate there are start up costs in growing a business this has to be done in a prudent manner. These guys are living the high life! Its simply no good growing revenues quickly if your costs of running the business are growing in parallel or faster! Thats just incompetence. Some here will know that I was quite bullish of this company a while back but unfortunately its turning a good, dare I say it great, opportunity into another AIM car crash. The management need to either start to get a firm grip on costs or GO.
me ol' fruit...glad I didn't flip back in c£2...this is poor show(er) ...imv
in deeply discounted placing...is that right ...extraordinarily weak signal from Simon and his chums (have I spelt that right lol??)
Oh dear. Enough cash raised?
Look at the stats - revenue up more than 200% plus avwrage user revenue up 26% and the U.S just getting traction. This is not a short term hold this is a longer term hold. I have a few of these I bought at 1.46p but will now look to increase that stake considerably. I would also imagine this company could be taken over by a bigger player at some point. Treat the placing as a buying opportunity.
As I suggested last week here's the placing but a savage discount to recent SP. Plus a shocking loss. This is in for a mauling today.
KaChing - I doubt they have got through that much cash but it's also about projecting their future requirements for this year, especially with an eye on the US. As you say much will depend on the acceleration of growth in ARR. The latest KPI's will be very interesting. As you say the sp seems low but company still valued at £12m. The market certainly is anticipating another fundraising so, for me, it's a waiting game now.
Dibs ...... Do you think they have burned through £4.9m in cash since June 2014? I’m finding it tricky to call as growth in annualised recurring revenue which ended the year at £3m would mean that on a monthly basis they are ticking along nicely towards monthly break even, each monthly increase in recurring revenue would mean less cash burned I am very tempted to add on this drop, but like you I’m wary of the reason for the drop, although I did wonder whether the drop has had something to do with the end of year results being late as the decline has accelerated since the end of Feb …… at least when they arrive answers should be forthcoming “The Group has now entered into a close period, ahead of its annual results announcement for year ending 31st December 2014, scheduled to be released in late February 2015.”
Last placing was just under a year ago. They must need cash now. This is screaming a placing. My guesstimate is 3m new shares @ 125p giving gross proceeds of £3.75m. Once that's out the way with a kpi update it'll be time to assess again. Still (potentially) a great outlook long term but these things take time and money to get off the ground.
Looks a goer of seen ...
From the unaudited info previously provided we can estimate revenues for 2014 at around £1.7m, possibly a little less. They had £2.3m in the bank at the start of the year and raised £4.5m capital. Expenses in the 14 months since 2013 y.e, which will include one-off US start up costs must, must therefore be less than £8.5m, or they'd have run out of funds already (assuming no credit facilities we've not been shown). If annual recurring costs are more like £6m, from Dec the coy is burning a maximum of £250k per month using the Dec ARR figure. In reality, ARR has been consistently increasing by 10% per month, so we'll be burning less than that. On current trends, which of course cannot carry on forever, they're only around 6 months from break-even. I would hope if funds were needed affordable credit facilities could tide us over. Personally I'm not concerned and have just topped up at what looks a very good price. Any cash call is already priced in anyway Imo.