Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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It clearly takes a lot of time and effort to gain traction with these bigger Tier 1 or 2 type companies , but having done so - the ability to gain more income from within them becomes easier and much more cost efficient as the relationship grows... ...this whole process then allows them to have just a few specialised sales people ( with at least 1 of the co-CEO involved) , with more people then focused on providing client support.
The better level of client support then often leading to more traction and revenue expansion.
Having a bigger , less experienced sales team focusing on dozens of Tier 3-4-5 sized companies is, in the end , somewhat inefficient and involves a lot of resources ...
The risk and pressure however has been getting through the door to those Tier 1-2 type companies....but..with the product investment , eventually a nod does come from the very top desk in the Board room
Lamp - besides the company advising the market that rollout and take up of services would be slower than anticipated, it's worth mentioning that they never have said that ultimate sales volumes will be reduced. They started producing Low (minimum contracted), Medium and High sales potential figures - sooner or later clients will start moving through the stages or not after the initial implementation - if not the company will almost certainly go out of business in a couple of years.
Now for the first time since the early days of service rollout they are daring to hint in some detail at the scale of some of their clients and potential client win. To do so gives an indication that they expect to see some success with the clients (I believe from the RNS's early on it is possible to deduce that at least one big potential contract was lost or at least delayed as the revenues never materialised - so they are cautious. It bothered me at the time but perhaps they did win it but on an initially small scale.
The outfits they described in the interims are likely all multi-billion turnover enterprises, whereas the sign up so far clearly IMO includes a majority which are well below the average potential run rate of £100k/annum that could be deduced with an average contract of 3 years. Currently the average turnover/client is about £20k/annum (£1.2m/60 clients) - so they were perhaps overegging it early on. Highlighting one with a revenue generation of £260/annum minimum and further rollout growth to come - so one company highlighted generated 13 times the average.
Therefore, it would suggest that the bigger companies are far more meaningful than signing up dozens of small fry - hence perhaps their focus on listing the bigger companies. Number of clients is in fact a little meaningless.
Perhaps we can also deduce that some have signed up for additional commitments as they claim 130 contracts and only 60 clients - some must be moving into the second identified rollout phase which is apparently 3 times the value of the first.
So generically hinting at the big clients and potential clients is IMO a significant guide of greater traction with larger companies and expected client base to come.
"The recent updates include an insight into some of the client companies, it's very revealing IMO as one company appears to account for approximately 20% of cloud revenues, so some others are logically quite small. There is a hint in this pattern that some of these companies could eventually become very significant -"
Join thank for your long post , can you elaborate about the hint ? they always say they have a pipeline of malty millions of order but all the have after 2 years is £1.2 per year not sure they will stay solvent for much longer
White - ever the optimist.
" Yes you’d expect some cash thrown off but that’s not going to happen."
Yes I do expect some significant cash to be throw off with a new client base of what looks like it could be anything up to £50/annum book nominal value (£38m so far) which they are conservatively estimating to only retain £10m for this year, so lots of scope to outperform and potential ramp up even in a shrinking market - the cash generation is expected to be very significant at £5m.
On the cloud side the company (CEO presentation) advised that at around 60 clients they expected the offering to be self-supporting - so no cash required and as the rollout ramps up. I would expect cash to be generated - of course it will at the high margins the service delivers - it's all about gaining critical mass. Don't worry yourself.
Thorndon - I hope it's a recovery play, if not it isn't investable, as you seem to suggest.
On the basis it is a recovery play, I support your second observation that the key factor "WHEN".
By "a long time off" I assume you mean years, IMO it can't be a long way off, the market for the services will not stand still and wait and neither will the patience of key investors.
They should have been growing and throwing off cash this year and pushed it back because of slow rollout and decision making from potential customers - they got is wrong. If that is true and it sounds perfectly realistic to me for our bundling CEO's - then the principle on which success is based still stands and the turning points is only pushed back.
The growth was tied to assumptions that rollout would start to compound as new and existing clients expanded at the same time - that still stands, and the growth should accelerate - not just reliant upon new business. Take for example the PR company they highlight in the interims which is surely our biggest client for Cloud services, they appear pretty well matured yet have another 18 countries to rollout. Clearly the based case contracted sales are not sufficient even for the company's survival and growth of existing client sales it has to happen, or the company is not a recovery play - it's dead in the water.
I think it is also likely that growth in clients will either fade out or explode- the service is either desirable or just an also-ran and that is not decided yet - that's why it is reassuring to see interest from presumably savvy larger enterprises.
Loopup could be a recovery play , which will only invest with spare cash from other investment.
At present that's a long time off.
Of course, anything is possible, But I'm not expecting a BMO or the much more likely option a delisting.
A delisting means shareholders rush to sell their shares and thy can pick them up cheap without having to offer a premium.
I don't think either outcome is likely as it requires the team having the confidence and finance (they are prepared to lock in for years) and crucially the support of a majority of shareholders and in light of what they have done in favouring a cornerstone shareholder and directors to maintain a blocking share I reckon it would need to be a super majority of 75%.
Only easy if you can rely on most institutions - so it's IMO too risky for them, especially as Loopup is the gift that keeps on giving for the CEO's - a listing could see them make a sizeable killing on their shares if they manage a recover, a delist will likely mean they will never reap the rewards again. Why would they jump off the gravy train.
Most likely outcomes are they eventually turn it around to at least modest success and if they can't turn it around it is a takeover or liquidation
Always insight posts :) Do you think a management buy out could be sooner or later. Most of us are waiting for some kind of recovery just to break even again?
The recent updates include an insight into some of the client companies, it's very revealing IMO as one company appears to account for approximately 20% of cloud revenues, so some others are logically quite small. There is a hint in this pattern that some of these companies could eventually become very significant - I was concerned that we were not winning any larger companies (even if they roll-out cautiously).
I also recall that the company touted the massive potential for other services that could be integrated into the platform were growing even faster, cross-selling opportunities for Hybridium, partner agreements (one should be rolling out NOW and a new Cisco offering this year. All that promise they should now be or start delivering - I still have concerns WRT failings in these, clear opportunities and now apparently side-lined areas. Unless they are quietly progressing them!
What was most interesting in the update was the comments that wins include major global companies across a broad range of sectors, and most notably:
"a leading global communications consulting firm with c.7,000 employees across 30 countries"
and
"wins include a US-headquartered Fortune 100 technology company"
Those are the only two that give some hint to potential opportunity size, what stood out for me was the Fortune 100 company, if it truly is a technology company in the Fortune 100 then it is a very big enterprise, for instance the lowest ranking is Thermo Fisher Scientific with 130,000 employees and a $31bn turnover, as you move up the companies are monsters like IBM, Cisco and Intel. Surely, they must be talking of a subsidiary company or simpl]y one of the top 100 US technology specific companies in some lesser index - otherwise it is a massive scalp.
They also have Proof of concept and request for proposals progressing with "top-5 global law firm, a Big-4 accounting firm, a major global sportswear company, and a leading holidays group". Some of these are by definition Multi £billion turnover companies, I suspect in most cases it is with subsidiary outfits, otherwise it equates to 10s of thousands of users.
The current revenue this year and financial outcome was disappointing to say the least - but looking forward it's understandable that institutions are prepared to continue to fund this, even if PI's are all but out of the game.
WRT the SP there is nothing to be done until the dust settles and the action is approved, then I expect the SP to recover steadily.
Very good of you to say so, thank you.
No one is going to be pleased with the performance, but that performance was priced in IMO- it's the step change which is expected going forward that now matters - they need to deliver and there really is no more leeway to contour up yet another pathetic "this time next year Rodney" excuses. This seems to have gone on for multiple runs just like the wonderful Fools and Horses series but without laughs.
WRT the capital raise, I think in all it was not only necessary to permit programme execution but could turn out to have been a smart move as economic woes grip the markets as raising money could prove very tricky for some - any company that does not resolve its problems in good time may be punish mercilessly (ref- credit crunch).
Peaky - you'll be sadly missed, I'm sure maybe by someone, hope you do well elsewhere and bring cheer to others.
Results show some promise. Contract wins accelerating, more could be in the pipeline.
No mention of the strong dollar boosting profits. Roughly an average of 1.3 over 2021 vs 1.1 now, around 18% ish increase alone.
Surely that will effect the next profit announcement?
I'm back in at 4p, not a penny more. See it as a punt really...
Set the buy and forget.
they go thru as sells as the buying price is less than the mid market of the spread being offered. It is the way the system works.
lamp - yes you're right the statement could have been structured better and ultimately every penny raised helps pay back outstanding debt in the long run - but the money raised is for investment not simply to cover a debt position.
The company debt is now relatively low/manageable and once they start making decent profits again, I would expect them to go for a new long-term package - hopefully when rates start to settle down. Debt is likely to be a problem for many companies in the short term in the UK thanks to loopy liz. It's either dopy, loopy or loony I'm not quite sure yet, depends how far she digs in.
by 30 September
When are the next earning due to come out and are there any key things we should be looking out for before that?
"Another thing is that the money is not to cover debt but finance growth opportunities - that is very positive IMO."
this is not the case
£1.5m will go to pay back the revolving credit facility
50% of the capital raising above £3m will be used to pay debt
The SP at its current level is OK, as it stops advance selling of shares, tail swallowing to take part in the capital raise and helps maintain a balanced market.
It will rise steadily, once the dust settles.
jointhedots
I agree - more given out now than ever before.....
I sold out at 15p and got my money back (damn lucky) and have bought back in a few this morning and may look to buy more
Still investing in the Telephony platform ( never stops) but getting to the point where revenues are coming in and clients spending more on add ons and client quality improving to higher Tier .... bank debt more secure as you say
Not so convinced about Hybridium though - although they did pay for it partly with shares at around 31p I think
Taking it private is a possibility at some point although I would prefer shares more spread out with more Institutional Investor holders , rather than a 29.4% holder having all those rights and votes
May well dip under 5p once the new shares are added
Good luck to you
All we can focus on at the moment is the bad and ugly, and it certainly does look ugly today, the exercise price is so disappointing and a real kick in the teeth for anyone that invested only a short while ago in a placing never mind long term holders.
I'm not going to dwell on the excessive pay, sheer face and greed of our useless directors - we all know the score - their pay should be slashed in line with the level of activity. But it's now up to our biggest shareholder to give them their marching orders when he's had enough - not in our control.
The sad thing is that the update is very positive and most importantly spells out in greater detail than ever before the opportunities and the client range, IMO it looks very good and explains why our lead shareholders is piling in- if the directors had put the information out before then capital raise would have got off at a much higher price- no accident I suspect!! I believe they simply don't care about PI shareholders, if we sell or stick with it makes no difference.
Another thing is that the money is not to cover debt but finance growth opportunities - that is very positive IMO.
I doubt many PI's will partake (bitten too many times) in the offer but I do believe the SP will rise steadily post completion as this could be the last as new revenues start to flow.
Finally, it dispels the potential for crashing out of business because insiders and those with greater insight into what's going on are prepared to partake
So, all in all though I'm not pleased I don't feel too upset.
RichWG
they are trades ..a buyer and a seller .... all that matters is the price ... you shouldnt be taking much notice of this crappy software stuff anyway...it is pretty meaningless
£2.50 to 5p
study the reasons ..why - relatively straight forward really ..nothing to do with manipulation I dont think
Pokerchops, agree but to have 15 odd buys totaling c.500,000 trades, go through as sells!!!!
I have been a holder for over 3 years and have seen a lot of 'iffy' deals over which time the share price has dropped from £2.50 to 5p. So no surprise in me thinking there may be some share price manipulation at foot.
RichWG
forget it..it is merely a trade
Possibly TurnerPope placing shares offered at 5p that you pay 5.05p and your broker keeps the 0.05p markup as cost