Member Info for ERV1

"The cost of gaining each customer is also way lower than your historic numbers"

What historic numbers are you referring to? My own projection to enable any form of success is based on £40 APC which is stated as being at the lower end - by the company. The CEO said in his presentation that he'd be happy paying £90 on a LTV of typical £250 did he not?

The company is valued at a pittance for very obvious reasons, most importantly the company would have gone to the dogs but for the recent placing.

Margins: If you are referring to 30% then this is no different to what was stated way way back by the company. The definitive proof of 30% for retail c/ms has yet to be translated into the accounts.

"This will work its way through the accounts" have you been able to establish when or even if breakeven will occur?
Or even, how?

Quite apart from the obvious number 1 reason for business failure - not enough money - oh and let's not forget "we believe this will be our final placing" in believing that things have changed massively, you will, I take it, also have established where the other failures to date have been? The second biggest failure is what?

It has yet to be proven that this enterprise is worth anything at all over and above whatever remains of the cash from the proceeds of the placing - so it's value should remain a pittance.

based on "it should not be allowed"

Pre IPO any shares in this enterprise were not worth a carrot as the liabilities were (£236,639) The pro forma asset value was £1,423,361 after the net proceeds of £1.66m were applied. So the stock that was floated at 8p was actually worth 1.4p.

Therefore, £2.08m valuation of 26m shares on an sp of 8p was pie in the sky as a more true figure was £370k - all after the placing as they were worth zilch prior to.

So something that was worth nothing then had a true value of £370k in May 2016 and that same holding is now worth 82% less on the current bid ........... all coming from the proceeds of an IPO.

The 26 millions of shares valued at £2.08m at IPO are now valued around £70k.

is not only interesting, it speaks volumes

At the point of IPO in 2016 it was stated that £1.05m was being earmarked for marketing.

In the June 17 placing if the net proceeds had been £1.72m then £650k was being earmarked for marketing - so 38% of the proceeds. The net proceeds from the placing were £1.26m. 38% of which is £480k.

In the FY17 accounts the amount attributed to marketing was £191k.

According to an illustration presented by the company in 2016 the average telecoms spend by a SME was

0-4 employees £1,024
0-9 employees £1,164
10-49 employees £3,969
50 - 249 employees £11,532

ALL SME's £1,579

The typical spend of a retail c/m or SME at this enterprise would be £833.33 over a typical 24 months contract, equating to a monthly invoice of £34.72.

At the point of IPO it was stated that there 10 wholesale customers and 41 SME's. The September 2018 Prospectus states that there are approaching 800 direct c/m's.

This is after 27 months or 13 quarters of trading.

THEY are interesting facts.

One perspective

To achieve the objectives the company would need to at least reverse the percentage of wholesale business, making the same percentage retail - for starters. i.e. Wholesale 36% Retail 64% . IF they could attract £3m of wholesale (at 10% gross margin) and £5.3m of retail business (at 30% gross margin) for the year FYE 20, then they may get to where they need to be - to move forward and become profitable in FYE21.

IF the "typical" retail contract value was increased by 15.2% with a CPA of £40 (working on a £300k marketing budget) and IF they acquired new business at the rate of 600 c/m pm consistently, over 24 months retaining the current recently disclosed retail margin, then they would be getting to where they need to be or at the very least breaking even. However, such an increase in revenues would perhaps lend itself to increased overheads/admin expenses, so ........

Many IF's on one simple projection of achieving the objective.

If 115 businesses signing up exceeded management expectations in a week, then one wonders what their target is for the month/quarter/year.

"over 600 small businesses concluding contracts" "around 20% of orders came from existing customers" So of the 622 throughout August and September was it a case of ALL new or 498 new and 124 existing?

the matter of new business/customers/orders/contracts/rgu's requires clear establishment in the terminology stakes - imo

and good luck to you hereandnow.

Which boss is on £60k pa? AH has an agreement for £120k pa, KL is on £10,800 pa for one day a week with all other days at £700 per day. RH is on £18k pa for 8 days pa with all other fees invoiced and at FYE 2017 his remuneration amounted to £50k. GW is on £36k pa for 24 days pa.

FYE 2017 Director remuneration was £203,500. Director pay is supposed to aligned to revenue and/or profits in the real world.

In addition, refer to the Articles: Item 4.15.

Based on the typical retail c/m spend, new c/m's would need to acquired at a rate in excess of 3 times August or September to get anywhere near achieving breakeven in an acceptable time-frame. Alternatively a heck of lot of wholesale/reseller business is needed, manifold from here on in- even though it isn't the focus and they are trying to move away from it.

Heavily invested can mean different things to different people dependent on individual circumstance.

On the basis of forward projections, with all the facts extracted from what has been made publicly available, if you believe the current cash situation will see them through to cash positive, then as I said I wish you the best of luck.

Hi Kenny

I've done my cutting to the chase with a formulated spreadsheet that includes for compounding, all based on the typical retail c/m re £250 gross profit over a typical 24 months and with a CAC of £20, £40, £65 and £90. Just covering the next 2 years, you'll understand, given what AH stated in his presentation.

More than a little insane if you believe £90 CAC is OK for a typical £250 gross profit over the life of a typical 24 months contract.

Or even if you believe that 302 new businesses for August and 320 new businesses for September is cutting the mustard, based on "typical".

New businesses/orders/existing customers/RGU's .......... hmmm.

It doesn't have to be though does it?

Can't find my generous doodling but in being so I was allowing for 250k gp so whichever way we're virtually on the same page.

The £500 spend generated 25 enquiries of which there was a 50% uptake, equating to £40 CAC, though how can 12.5 be right ........ half a customer?

Something else ....... new business/es, orders, existing customers .......... blurry stuff.

Hey, I said I was being generous in arriving at (£1.3m) maybe add "expected" eh?

I was being a bit generous with my doodling putting the loss for FYE 18 at (£1.3m). Making a running total of ?........ nil points for adding the years up and you'd have to include 2015 given the founder loan etc etc.

There's another point of intrigue, the approaching 800 customers bit and the amount quoted as being typical spend, am I missing something, cos that has not been translated in the figures??

Good afternoon, when, or even if you have the time could you just take a glimpse at the top of Page 5 of the prospectus dated 2nd June 2017 and then compare it with the first paragraph pf page 15 of the prospectus dated 13th September 2018.

Not sure whether I need to stock up on salt.

800 customers was the figure detailed in the publication of the prospectus in September. This figure would have included those for August and could even have included some for September.

Going back into the company reports customer numbers were mentioned, not a lot of growth to date is how it reads.

are no apologies necessary when drilling right down into all that has been published/made known and the facts are derived from the company report and prospectus for the purpose of greater clarification.

in the 6 months to 31.03.17 the revs were £655k of which 65% was wholesale: £425k wholesale £230k direct
in the 6 months to 31.03.18 the revs were £689k of which 64% was wholesale: £441k wholesale £248k direct

an increase of a grand total of £18k on revenues derived from direct customers over a 6 months period and after 7 quarters of trading since IPO.

If as is being depicted the direct business is the focus then clearly they are getting more than a few things wrong at this enterprise. However that's all history ..........

Maybe matters will improve given that the 3rd CFO (plus an interim) is now in situ, in such a short time frame.

Has there ever been any explanations as to why the tenures of the previous post holders were so short? The average tenure of a CFO used to be around 5 years ......

If it's EXPECTED to be accretive to monthly revenues after an initial 6 months period and it's EXPECTED to deliver at least £3.5m over an initial 3 years

then

it can also be EXPECTED that it will hardly make any impact on the next interims for period ending 31st March 2019 and that based on wholesale GP margins it can be EXPECTED that it won't go very far at all in reducing FYE 19 operating losses.

But of course what the company state/have made known, should only ever be taken with a pinch of salt.

5 companies presented yet there are only 4 videos on the Turner Pope site .........

yes with due respect, Todster did start a telecoms business from somewhere, all without taking the proverbial and implementing a begging bowl routine. Oh yes and he knew from the outset just how to achieve breakeven in this sector.

if this carries on the team here will be greater than the staff at this enterprise including the directors excluding all the outsourced stuff. Seem to recall an article (think it was the telegraph) where the CEO stated there were 26 customer service staff ........

Todster you came into my thoughts yesterday ..... and here you are ...... and I know that you understand this sector implicitly.

Hope you are winning.