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I am optimistic about the next Update ....revenue improving , lower investment needed in 2023 having done a lot of that in 2021 and 2022.. Fund raise of £3.5m last autumn. ..Sales pipeline of new opportunities exceeded c.£100 million ARR at the end of H1, debt Finance cost is very manageable...27 PoC opportunities at the end of H1, including with a top-5 global law firm, a Big-4 accounting firm, a major global sportswear company, and a leading holidays group
Net Assets on the books, at H1 end, of £45m, against a the current MCAP of £6m
Having had a closer look at this there is in my view a clear high risk and potential high reward with LOOP.
The big cons are lack of profitability (high cost base?), low cash and some debt. The big question is will cash last until profitability is restored.
On the other hand Mcap of £6m is tiny so a lot of potential upside if they get through the next 6 months. The customer base is growing and they have a great network covering 67 countries.
So the next trading update is critical. Not long to wait.
Could everyone that follows the BB even if you disagree with my views please vote up this post so that we can see how many actually follow the BB, I suspect it will not reach double figures.
I promise I won't get swell headed if it does, it would just be interesting to know if we few posters are basically talking to ourselves - someone posted recently that the last out should turn off the lights, maybe they've got a point, but hopefully as David has just pointed out we will get some good news imminently
In last two years the update was on 15.2.2022 and 8.2.2021 so another one should be due in next seven days or so.
It is hard to call but most news has been positive on contract side but finances look shaky on cash and debt side. Raising at 5p means those shareholders are well under but the bigger question is whether it is enough to keep the business afloat.
Having made a good profit at the peak and then reinvested some of that at 20p it is a gamble but have bought 100k shares at 3.52 - showing as a sell.
Midas - "BoD where there is deadly silence need to do something about the decline in the share price, and at least give us an update on the current situation"
Yes they do need to communicate what's going (good or bad)and their plans/strategy in more detail, but they cannot release RNS's to control the SP, that's manipulation - so if they a not doing well or have poor plans that could more news may actually hurt the SP.
They must get on with the job an make a success of the business, that is the only cure, what is hurting is the natural tendency to assume things are going badly in the absence of news . The obvious fears are of going bust or taking the company private - they could dispel those fears by articulating a clear plans and a strategy.
One thing that really bothers me, especially for a technology company to through a transition is that the website, Linked in and social media outlets etc appear neglected like they have put up the shutters - it's not a good look to potential clients. They where trying with Ben Lee and others producing content and making the website live but appear to have abandoned that now, projects a lack of ambition/engagement/belief.
It's not surprising the SP is where it it.
Apparently they are thinking about changing the name of the company from LoopUp Group to LoopDown group, in order to reflect the DOWNward trend of the share price over the last 12 months plus, as well as better align themselves with their shareholders and the direction they are following. It wouldn't be so sad if it was true, but the BoD where there is deadly silence need to do something about the decline in the share price, and at least give us an update on the current situation and how they intend to get the share price moving North again.
Poker - if they can convert even a reasonable proportion of them into sales it will change the whole dynamic of the company - it's worth noting also that they eluded to some potentially very big clients in trials and broader enquiries in the RNS and that they reverted to ARR potential instead of 3 years value which they where originally projecting, almost certainly after they realised to more cautious rollout clients wanted made them meaningless aspirations.
Nevertheless, they have stated that clients tend to want contracts of 3 years which effectively provides for an order potential of around $300m and rising. Of course only a fraction of that is likely to materialise, but they only need a fraction to make the business a success.
" the Group's sales pipeline of potential new Cloud Telephony opportunities continues to grow and now stands at more than £100 million of additional potential ARR, of which approximately 15% is at written proposal stage or later. "
so....£15 million must be getting very close to contract signing by now ...given that that was released at the end of last September
Nice find jtd
Loopup may be mare secretive than MI5, but Telefónica’s boss has recently discussed his company's viewpoint technology and training upskilling at the World Economic Forum - I guess a prestigious event.
He appears to have strong views on disruptive technologies for an establishment figure.
Apparently they have committed €100m of investment developing an Innovation and Talent hub, and their Universitas initiative is part of this - even if Loopup are not mentioned directly - having a senior executive pointing out the benefits can't be bad for Hybridium. They are clearly committed and not penny pinching so it will be a great commercial test for the system.
Extract:
"Last year saw a slew of announcements in the Group’s home market, Spain, where Telefónica is investing in upskilling and reskilling its workforce. Early in the year, Campus 42, the Group’s programming academy, was expanded to four Spanish cities, and progress was made in turning the Distrito Telefónica HQ in Madrid into an “Innovation and Talent Hub” by 2024, utilising €100m of investment. As part of this, Telefónica launched Universitas, a “corporate university” for in-person and remote training, and partnered with cloud communications software provider LoopUp Group to equip the centre for hybrid upskilling events."
https://www.telcotitans.com/telefonicawatch/alvarez-pallete-public-private-partnerships-key-for-future-of-work/6086.article
Shareholder Percentage Held
Andrew Scott (and related parties)* 29.3%
Credit Suisse 9.2%
Jarvis Investment Management 8.1%
Schroder Investment Management 7.11%
Hargreaves Lansdown Asset Management 5.6%
Adara Ventures SICAR 4.0%
Herald Investment Management 3.8%
Michael Hughes 2.11%
Steve Flavell 1.67%
The main shareholders own 70% of the shares
JDT
I think they are looking at Updates on a Quarterly basis... 2 Trading Updates and 2 Results making up the 4 Quarters...unless anything material emerges.
In-between, I suspect they are intending to just get on with things....and collate a quarters worth of news to update with.
" many believe they are incapable of anything else and simply run the business to line their own pockets "
I doubt that, given there is a shareholder with a substancial interest in the company who has the voting power to more or less decide if they stay in position , or not...
I think that having spent the last 18 months or so turning round the business and investing a lot in it , things are much more in a position now to receive contracts and revenues as a result of that investment....
Personally excluding outside problems with regards to the ecomy, they should be making some positive progress..
I always thought it was a very good deal and the more I have considered it the better it looks. On the face of it it is Excellent.
Normally a massive boost in turnover coming out of the blue coupled with bullish projections for the long term business would send a companies SP soaring - but not here it just went down further.
They (the 2 CEOs) have screwed up so comprehensively with prior plans and projections that the market simply doesn't trust their competence to deliver. It's going to take time and good news flow to turn it around.
However, that does not change the fact that things appear to be improving significantly and the new turnover should make the company's underlying business profitable and allow plans to be realised. All great
The sting in the tail is that it hinges on the CEO's having done their homework diligently and not ****ed up on calculations or projections - many believe they are incapable of anything else and simply run the business to line their own pockets (not me of course lol).
So here we are the last PI hold outs with the SP reflecting a company with no future and at the same time a company with falling debt, projecting significant growth and profitability.
Perhaps if they were more open with investors they would enjoy more support but their natural operating mode is to say nothing other than what is unavoidable - since Ben Lee left the web sessions have died out and there have been no new Customer stories or significant initiatives. So no wonder the SP is still under downward pressure, not to mention that they keep dipping their fingers in the pie with cheap share options.
For instance, what happened to the Cisco cloud Comms initiative or the London Hybridium centre we were developing, maybe they are progressing well, maybe they are abandoned - the point is they need to start providing Investor Relations to build trust and confidence, but it's not in their nature and there advisors are defending secrecy due to commercial sensitivity. Who are they kidding whatever Loopup do it is not eagerly followed by competitors. I'm sure the directors of the multi-billion $ competitors are worried sick about minnows like Loopup.
That me, not gushing with faith and optimism, but still seeing a very real possibility of a major turnaround - I think all those left understand the situation.
Always insightful posts :) So just to clarify, the deal with PGI is better than you thought for loopup?
I still think loopup has value and the share price will bounce up significantly once a little news comes out.
Not the RNS we need, but no damage unlike recent updates.
Looks like trading has slowed to near nothing again and the last little flurry was actually out very own reliable director pushing the SP down to get their cheap shares - oh well you've got to feel for them, only earing a few million out of the venture.
I really wish I had a huge tax liability - you only get that if you earn mega-bucks, it's farcical when rich people crumble about huge tax bills, I guess it's awful being rich.
Moving on, as I'm straying too close to politics, I just re-read the last trading update as you do and noticed that the deal with PGi Connect involves sharing profit with them. I thought perhaps 50:50, but I missed the significance of note 2:
The statement " the Group will pay PGi Connect a share of invoiced and received revenue1 from successfully transferred customers for a period of three years."
The note "Approximately 13% on a weighted average basis"
So it's not based on profit and it's a relatively small proportion of revenue that allows to company to fully benefit from efficient management of the new customers It's so much better than the deal I thought they may have struck, if they manage it carefully and keep mark-up high (at current levels) they should make great profits. From a PGi connect perspective it means they get something even if Loopup screw up the job.
IMO it really was a good low risk deal.
"The Amazing Power of Compounding"
Warren Buffett has often spoken of the principle and built his fortune never inventing anything but by steadily piling on value year after year. Another famous example is IBM who at one point became the biggest company in the world by compounding steady growth over a few decades decades
So yes, if Loopup can start to show steady growth that will do me, small gains week on week will see make for a strong long term recovery but equally important it would see an improvement in confidence.
Gradual , small,daily up-ticks off from the lows ....needs to build on that and create a base now at 4p to move up from
Amazing potential here, company has had a major injection of revenue to see them through to supposedly profitability with cloud comms.
All still to play for - we all know our management team have alienated most investors so no (few) buyers in the open market - the SP is truly atrocious but is understandable until they provide an update that they are cash flow positive (should have turned positive last year but failed) and/or some clear evidence that Cloud Comms is a success.
Not time to turn off the lights yet, however much you may crave it.
There is practically no trading, so easy to take a £million off the market cap for a few grands selling - but the positive is that very few are selling so the SP could soar on good news.
There is genuine potential here for a total loss or a multi-bagger - we really don't know as the BoD have been so incompetent
Last one out switch off the lights and put us out our misery.
Covid may have been a blessing or not , but the change to the way we communicate is transferring to cloud base.
The same restrictions are in place for licence communication which puts Loopup in top ten company's , the problem is was it too late in conversion and if they managed a turnround ( Profit ).
It a hard one , as would invest more but the only delay is the management communication and failed buyouts conversion to profit.
Jtd
I had hoped hhat most of the bigger users would transfer, leaving the smaller customers being the most likely not to. Given what Loop can now provide and upsell it seemed to me that the transfer customers would be getting a better deal overall than what they already had. I have read that PGI had not been investing enough which may well have been the reason for the whole business deal....to transfer to a company that has been investing and receive a payment back for the client listing offered.
Well I agree they have painted a pretty cautious picture regarding the revenues and under promising and over delivering would certainly be the way to move foreward ...suprise to the upside and generate positive momentum from this floor level.
Putting the transfer costs into this year end account and starting afresh in 2023 is also a beneficial move with preparing a positive improvement on the accounts for next year...
Everything is now in their hands to create some real gains...it is now or never for 2023
Pokerchips - I think you are way off in your estimation of expected initial churn (not really a genuine churn it's a special case - the annualised loss is unknown).
First thing that is obvious was that the initial transfer was the most dangerous time wrt losing clients as the issue of if the actually wanted the service was brought to the forefront of their consideration, so 13% was IMO very low and I was surprised it wasn't higher - the big test is how many of them stick around for the first year.
Remember the transfer of MeetingZone clients was a disaster with service failures for new and existing clients - it looks like they may have learned their lesson and got this right.
Anyway more pertinent than all the above is the value of the client base that transferred, and I think it is way above the conservative estimate the company made of £10m/annum revenue, nearer £30m and possibly more.
I think the market has got it wrong, as the company are massively underplaying this, probably because they know if they overestimate the company will be punished ruthlessly.
On 7th Sept the company RNSed the clients represented a revenue stream of circa $35m so assuming 13% loss of business that leaves £30.45m /annum (nothing wrong with that Pokerchips)
"On Friday 2 September, PGi Connect sent out the first and largest batch of contract assignment notices to c.8,100 of its enterprise customers concerning the transition of services to LoopUp from 1 October 2022. These customers currently generate an annualised revenue run-rate of c.£34 million to PGi Connect."
Also note that is not all the clients , so we can assume there is more value to be added if some of the other clients transfer.
Even better is the new potential to X-sell Cloud services - that will come with time and as a good proportion of Cloud customers come from existing clients already the significant opportunity is obvious.
I think the market is being very harsh on Loopup - but it's understandable due to the history of out management underachieving.
They estimated that the Gross Profit for the PGi Connect contract to be 60% and so the higher transfer costs will have initially reduced that....but ..those transition costs will appear in the FY22 account leaving the new FY23 year starting in January to be able to achieve that 60% gross profit level in the new account
" c.7,000 out of c.8,100 former PGI Connect conferencing services customers successfully transferred "
The churn of 13.5% in the end was higher than I expected ..I was expecting maybe 7-8%...does that 7,000 still meet their budget estimation of " c.£5 million of net cash in the 12 months from October 2022 to September 2023"
In September they did say :
"FY2022 revenue to be marginally above market expectations, at marginally lower profitability after some additional required investment associated with the PGi Connect customer transfer project; "
so added transition costs were forecast ..
To be honest I thought the RNS was good, but IMO has been greeted badly because yet again it introduces uncertainty about earnings.
As I recall they did exactly the same last year, if I didn't know better I'd suspect there are happy with a low SP as it gives them more and more leverage over shareholders
Anyway, I think the dip is overdone as the revenue looks like easily beating forecasts and costs are obviously going to be higher than anticipated when supporting more clients during growth - and there are more clients to transfer yet.
The cloud offering should be virtually self-supporting by now- Steve said he expect it at around 50 clients- compounding is starting to kick in now.
In response to the comment about " not a fantastic product" , the product is MS teams which is the worlds most popular, they are providing added value services and the RNS says they have retained all clients and signed additional contracts - if the business critical service was no good they would be losing lots of clients.
It's not a fantastic product.