The next focusIR Investor Webinar takes places on 14th May with guest speakers from WS Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
I think that's a very good summary Trek. I have done some similar numbers. This is by combining reading of the Accounts with speaking directly to CFO Jonathan Hall at a presentation they did last night. He specifically highlighted a point, also made in the Accounts, that due to timing of their year end they had Trade Receivables outstanding of £2.3m in the figures but £1.8m of that was then collected in the 3 weeks following yr end. So as you say, cash by 3 weeks into July was £0.6m + £5.25m + £1.8m (less op ex for those 3 weeks). My estimate therefore was c.£6.5m-£7m by end July. In terms of opex going forwards Jonathan talks of c.£800k per month on a straight line basis. This makes sense as the Accounts headline figure includes depreciation and amortisation figures. But if you look closer you will see Net CASH Used by Operating Activities = c. £8.47m. That was roughly £700k per month. So I am using £800k per month ie increase of c.15% and to tie in with Jonathan's comments. If we then look at Revenue and assume say only 50% of the increase that Allenby are forecasting for 2020, so maybe £11m (rather than £14m) that is c.£900k per month on a straight line basis. I realise using straight line doesn't represent the more likely lumpy income profile, but to model it more accurately is not possible without all the info. So even with zero income they would have c.8-9 months of cash from end July. But once Revenue is added back in, even at its current level the runway is much longer.
Basically, the conclusion is that they may not need any more raises at all, but if they do it will be quite some time away and may be more modest in size than the last time or be related to specific corporate deals, etc. All the talk by people of them needing to raise again very soon is just codswallop and comes from people not doing their homework properly or looking to scare people into selling.
Hi Alpaca, possibly but not yet. If they need to raise it will be because revenues are lagging as opposed to costs which I think they have well under control now. Even the director pay, although pay has increased it is at the lower end of a co with this MCAP, and being honest if they can get to breakeven the directors deserve a rise. Anyways I would say question is how much revenue do they need to break even.
If I am reading this right they have from 1st June...
£5.25m from raise + £0.6m cash + £1.8m sand bagged = £7.65m to start year.
Admin expenses at 10% increase = £10.56, should be lower without Impairments but may need more recruitment for growth so I would go to £11m
Operating loss will obviously be higher if they achieve significant revenue growth . With the new consultancy initiatives and real101 + expecting more advertising revenue and additional elite series (£4.8m profit if they run 3) and better product mix I would double last year’s revenue figures so £15.8m. However, due to scalability and previous investment in infrastructure I would not expect opex to double. Fag packet I know but allow 60% increase in opex on top of last year’s cost of sales (£6.8m) for twice the revenue probably won’t be far of so £10.88m, say £11m.
In....£7.65m+£15.8m = £23.45m
Out..£11m+£11m =(£22m)
So they are forecasting breakeven, fag packet shows £1.45m favourable. What helps is whilst revenue comes through at the end of the year the costs tend to be front of year and we do have cash atm. If they need to raise it will be because of income timings or not getting the revenue through but I think the growth in eSports is such that the revenue will land. Makes now the time to buy imo and perhaps offload some depending on Q3 trading statement. Then I will be looking to see if the model looks self funding or do they need a pot of cash to start the next year and if so what are the options.
I am hoping investors will be running similar numbers and we see an uptick in volume because if they do look like being ebit positive then imo it will blow the doors off the sp! And going forward media companies can be very profitable investments once they get going. This co could realistically have cash options like divi, share buy back or acquisitions in a few years to come.
Trek, with a piece of string!
Given what the company has written in the past and what actually has transpired, I'm going to analyse the results in greater detail before posting a response. But, for those who have responded here, will the company need to raise again?
Can see this going a lot higher with volumes like Bidstack....the numbers in today’s report all add up. GLA
Proactive...
https://www.proactiveinvestors.co.uk/companies/news/905208/gfinity-cuts-losses-as-revenues-surge-over-80-905208.html
Pretty disappointing result following such fine numbers, volumes are very low. Just wondering if it is general investor aversion as many Aim shares suffering. Still sticking to my guns, this is a great entry point and a tuck away. Have some powder dry to by more both here and DCTA if they dip.
Trek
Tried buying more gone to NT, can sell 100k np so have put in a fill or kill request for today. I’d be surprised if any serious investors got their heads around those numbers so early on a Monday morning! Let’s see!
Trek
Very good read...
This is most encouraging from Jonathan Hall
“Year-end cash of £0.6m (2018: £3.7m) was in line with expectations. This figure was impacted by the phasing of invoicing on certain key projects, which resulted in a trade and other receivables balance of £2.3m at year end. A total of £1.8m of this balance was collected in the first three weeks of July 2019. This was supplemented at the end of the month by the completion of an oversubscribed equity fundraise, raising a further £5.25m (gross) with strong support from both new and existing investors, leaving the business well positioned going into the 2019/20 financial year.”
So we enter this year in a much stronger cash position. If we assume another 80% increase in revenue, I think it will be much more due to real101, then notwithstanding keeping a similar cost run rate then they should be ebit positive next year. That would be an amazing achievement! A call out for me is increase in pay at just under £1m. I expect that to be more this year as they have recruited, rightly, key skilled staff and as always director pay has increased. But the increase in scalability should offset that and if they can deliver on those circa 30% margins all should be well.
Buying now sub 4p could be an amazing investment as you are getting in early on a funded growth curve for a media company. In a couple of years time this could be very cash generative and a pretty low cost business model. Of course all the usual caveats apply but I am (kiss of death!) expecting a blue day today. I expect proactive to headline the revenue increase but in reality there is much more to these numbers than the headlines. I recommend any potential investors reading Jonathan’s report and weighing up Gfinity’s future prospects in the competitive eSports arena. Incidentally I noted the RNS from BLU last week that also wish to invest in this space but the companies they picked imo are nowhere near as advanced as GFIN.
Trek