RE: Stock8 Oct 2020 16:46
Hi Weathergeek,
I hope you'll take this in the spirit in which it's made and not treat it as some mindless piece of de-ramping.
My questions relate to the assumptions made or implicit in the detailed projections that you've rather selflessly undertaken, I appreciate it's easy to be an armchair critic of work done by others that one wouldn't/couldn't do oneself !
My questions are :
(1) We've been given a number for on -boarding revenue. (a) is your undrstanding that this a downpayment/advance on the regular service fee or additional to it ? (b) do you think it's run as a 'loss-leader' -to get business going - or as a 'profit center ?' i.e. will the revenues generated be fully -or partially ? - off-set by associated DD/processing costs ?
(2) We've been given numbers for projected service fees, payable yearly for the 3 year (+) facility life. (a) do these include or exclude the on-boarding ' fees above ? (b) are these 'flat' ie irrespective of subsequent facility usage (which incentivizes clients to max out) and become more expensive if clients , for whatever reason, can't ? This will likely impact how much of anyco's business SYME will WANT to write ...and how much anyco will want to sign up for.
(3) I believe AZ has suggested a 50% margin net-to-SYME on the service fees. AIUI, some shareholders/funders(?) are entitled to business introduction commissions. Nothing wrong with that, I hasten to add. But 0.5% flat would eat into the 'net' in a big way. I'm thinking of the Datoom partners Concetti and DeFrancisis, p.129 of the Prospectus, there may be others.
(4) We're told , AIUI, that use of the 'captive bank' will increase the net-to-SYME. Why ? Is SYME charging the 'captive bank's ' 'captive customers' (?) more ? Is SYME doing less DD (because the bank will already have done the DD/KYC know your customer) ? Neither seems to make sense because most customers will be new/voluntary, so SYME has to be competitive and 'captive bank' won't have prior knowledge of the customers.
(5) On the info given, the fee range on the first Euro 300m , depending on whether on-boarding is on top of or included in 'service fees' and amortised over 3 years in either case is between Euro 7.1+(2.7/3=0.9) = 8.0/300 = 2.67% and Euro 7.1 - (2.7/3=0.9)= 6.2/300 = 2.07%. Would you agree these numbers ?
(6) I ask because I'm trying to get a feel for 'all-in' cost-to client : ie fees + funding, and how competitive SYME's offering will be compared to the conventional.
If funding costs 5% (4%* to funders, 1% to 'captive bank), then all-in would be 7.07% to 7.67%, do these seem right to you ?
* at today's rates. Funders /investors won't want to commit for 3 years fixed, esp. where inventories/demand may have seasonality.
It's hard enough to make a stab at Earnings, though you've tried, thank you. Profitability is another issue. In theory, SYME should be throwing off cash like crazy, though.
'Sales are vanity, profits are sanity, cash is reality.'
Than
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