We would love to hear your thoughts about our site and services, please take our survey here.
SloppyG
It could be that they have already refinanced their debts to reduce payments in the short term.
I would have expected more strongly worded warnings in the last RHS if there was any danger that their financial situation was terminal.
This is still a hold in my view.
Simms
Foxyjoe talks about a burn rate of £400k per month, that doesn't seem unreasonable and could easily be managed for the short term even with the restricted revenue.
Also as you say, they probably still have around £5m left to drawdown on their loan.
Most of the recent bad news has related to money wasted on going nowhere projects rather than hard financial hits - historical now.
My guess it that the actual finances are not much different to where they were in June at the last update.
So credibility may be shot but this is still defiantly a hold.
So cash flow is very tight, but how tight.
The company had loan facilities totalling £12m in June - apparently it has already drawn £5m - maybe more.
The following was in the last RNS
"In addition, French client Idex's France MDC project has rescheduled the completion of front-end engineering design work to December 2023, such that orders will not be placed for equipment until early 2024 and delaying anticipated revenues from this project. Furthermore, client projects in Belišće (Croatia), Livadia (Greece) and Wilseyville (California, USA) are experiencing delays with securing full funding, thus delaying revenues previously expected in Q4 2023 into 2024, subject to securing such funding.
As a result of these events, and in light of the Company's publicly announced rationalisation of other, legacy projects with unmitigated risks and liabilities, the Company has updated its overall FY 2023 revenue forecast to €2 - 3 million."
Cash spent on the cancelled projects is now irrelevant - its gone unless the courts say otherwise - but a least no more cash will be needed apart from legal costs.
So going forward - do they have enough cash in the kitty to survive until they start to get more revenue in 2024?
Off course they need more cash to grow, hence we will inevitably see another equity raise and more loans.
If they can survive short term, I think the company does have a future.
For a larger company, like Wood for example, the risk involved for the UK projects would have been acceptable and probably normal but for a small company like Eqtec this was clearly not the case when looking back in hindsight.
In mitigation, I think the BOD probably thought that cash would be flowing in for other projects by now, therefore, the risk would be covered by higher cash flow from elsewhere
But the poor macro with higher interest rates, higher construction costs etc has certainly taken its toll post Covid and added to their error of judgement may have cost the BOD their business.
Making an error of judgement isn't against the law.
If they had pulled it off, we would all be sitting pretty, but unfortunately more often than not it doesn't work out that way, especially when there are so many players involved.
BurrenBoy
Its nothing to do with honesty or otherwise.
Its simply that the cash flow isn't there - that means there will always be the threat of dilution and the SP falls.
More bad news lowers the SP even more and gives dilution more impact.
Its the same story for most AIM companies, especially when the macro is bad, hence the 80% fall.
I know what you are saying Warren, but try to focus on the company not the SP.
If you look at the stats the AIM index is down 26% since it was formulated in 1996 and the FTSE250 is up 320% in the same period.
Many AIM companies have moved up from AIM to the main index and I think ITX has the potential to follow them.
Its these companies that grow out of AIM that are the winners and the SP ultimately grows with them.
My guess is that the way they delivered the bad news this week, in two devastating RHN's, was to clear the decks for a clean start.
The interims will signal that clean start with hopefully good news on short term liquidity.
The BOD must realise that they are living on borrowed time and have to turn things round, so I would also like to see a structured plan for how they plan to do this, with a fully committed timetable.
Clearly the high capex projects are a failed idea - now its time to let the tech teams at Eqtec do their bit and roll out fully funded projects quickly and efficiently, lets see how good this tech really is!
Totally agree oz
https://www.youtube.com/watch?v=OZBpu67tbS0
It will be interesting to see what the shorts do now.
I guess they were partly responsible for the magnitude of yesterdays fall and for the rebound today.
I suspect they will close their current positions, but will they start new positions?
Warren
It generally takes much longer than two years to show a meaningful profit on these early stage investments - think 5-10 years, but be prepared to top slice given the opportunity.
Also note that the innovators don't always get rewarded.
Richard Trevithick the true inventor of steam transport, with his high pressure engine, died a pauper despite risking all when he drove the Puffing Devil up Cambourne Hill.
https://www.youtube.com/watch?v=FEjGBgBxSNM
Not sure that it will drift down to 150p Smart.
It does seem to be stabilising around current levels.
But, this is still an excellent buying in price.
As I said the other day - I think that Ocado Retail has far more relevance to the group than was immediately apparent.
So, comments about Ocado Retail become a sensitive issue - they swing the SP causing the volatility we have seen over the last few years and give encouragement to the shorts.
Today is a classic example, my guess is that the fall on opening was probably enhanced by the shorts, who used it to their advantage and also triggered stop losses.
I think that Eqtec will probably pull through and continue to trade.
It has loan facilities in place and even at these low levels will probably seek equity funding.
Current shareholders are stuffed, but its little point selling, just wait on events.
I guess that the SP still has some climbing to do.
Its been rising steadily since the start of October last year and if it carries on at the same rate we could see 300p in six months time - this would be a recovery level for the business and bring it back to the levels of five years ago.
Allowing for some overshoot we could even see 350p later in the year as we enter overbought territory, before the SP settles down for less spectacular growth.
Building a company on whatever scale is always learning business and we all make our mistakes.
These mistakes, often costly, are inevitable.
I have reasonable expectations for EQTEC now, they seem to be moving on the right track.
As for the shareholders it must now be 50:50 regarding another round of dilution and prospects for a return on our investment drift further into the future but its still a hold.