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Back of envelope valuation for the full year:

£10m turnover
£4.5m GM
£3.5m - £4m overhead
£0.5m - £1m profit

Valuation range:
10x £0.5m = £5m mcap (3p / share)
20x £1.0m = £20m mcap (10p / share)

(Compared to current price of 1.7p)

Of course, they might continue to bumble along at breakeven like they have for the past few decades. But, you never know, decent profit for the first time ever seems quite possible and would likely see a many-fold increase in the share price, once someone actually noticed ...

@bobbyaxelrod My thoughts on the accounting terminology:

"Case completions" are where the case has been completed, but money might not yet have been collected. So case has settled out of court, or a court has issued a judgement, so there is no longer any uncertainty about the value of the claim.

"Realisations" are when the money is actually collected. Mano might have agreed payment terms, or they need to seize assets to sell, etc. so there is a delay between "case completions" and "realisations"

Regarding your example in your question (2):

"Year 1 - Buy 1 case for £4m, net settlement value is thought to be £8m with a success probability of 75% so capitalised as an investment at £6m"

I think they are not actually paying anything like £4m for a case which they value at £6m. I think they are paying way less than that, just a few thousand up front, then paying the original claimant a big chunk (50%?) of the proceeds. I am not certain about this, but I think I have formed this impression from some of the presentations and Q&As that they have given. A consequence of this would be that most of the value hits the balance sheet as soon as the claim is acquired, and maybe just edges up a bit as they get closer and feel more confident that it will pay out.

For me:

1) They can actually make a profit
2) Sales + forward orders 70% up on 2019 (ignore 2020 because covid). Gross profit this year is £3.7m. If they can really deliver, say, 50% increase in gross profit without pushing up overheads, that's going to be a decent £1.5m ish PBT, which is 20x higher than this year!

Thank you, appreciated.

(Apologies that it is not obvious to me, but @barwickman who are you accusing of causing panic? I don't see any message in this thread which looks like it is trying to cause panic?)

Hi all,

I've been invested here for about a year, but confess that I have not been paying close attention lately. The last time I crunched some numbers, many months ago, I got this optimistic estimate for a full year's revenue:

£m
50 - From existing clinic if full
40 - Additional HMG contracts for COVID (in Whitechapel / Royal Free?)
15 - Normal year for Venn
105 - Total revenue

But obviously the market isn't expecting that, because 2.5x £105m would be market cap of ~£260m, share price of over 40p.

Current price of 25p = ~£150m market cap implies £60m revenue at 2.5x multiple.

Thoughts, anyone? Does anyone have a more up-to-date estimate of revenue for the year, please?

Thanks for reading.

My take on prepayments:

Customer pays £5m up front. Cash goes up by £5m.

A few months later, the company has to use that money to actually fulfill the contract - paying for staff, running the centre, etc., so cash reduces.

It isn't capex. It is just prepayment.

If customers were not pre-paying, then cash would move the other way:

Spend money on running the challenge trial (people, accommodation, etc.). Cash goes down.
Invoice the customer.
Wait 30 days (or whatever)
Customer pays.
Cash goes up.

Sorry, typo and error in my cash burn calculation. I mixed up the 2.2m and 3.3m, should have read:

Cash at year end: £2.7m
Cash burn 12m = 2.7-2.2-4.0 = -£3.5m
Cash end March =3.3m, so maybe they can stretch for nearly 12m without raising more money, actually.

Cash has gone up by £0.5m since Dec presumably because they raised money in January and maybe also have drawn down the convertible loan facility.

And, yes, of course I am bearish because I want to get in, in that I would buy if the price was lower. Long term, seems like a decent business, but looks very overvalued just now. I would buy at 20p, probably.

I'm still bearish on this. Operating loss of £6.4m overall. Looks like they only had about 6months of cash left at year end, then £1m convertible loan post-year end, so presumably they'll need to do a new fund raise soon?

Cash at year end: £2.7m
Cash burn 12m = 2.7-3.3.-4.0 = -£4.6m

I am out, actually. The fact they only managed £3.33m sales in six months to Dec 2020 is pretty weak. There had been figures thrown around that they were seeing a big increase in enquiries and quotes ... every other home improvement company seemed to do very well in final half of 2020 ... even with Nov lockdown, you'd have expected some improved performance, but they still just churned out the same as 2019 (approx).

Tks, will take another closer look.

I know that offering bear cases is unpopular on this board, but here goes anyway. I not a 'deramper', just offering my thoughts.

I last looked at this share back in Oct 2020. I've missed out on a 4x rise since then (!), but I can't really see the holes in my analysis from then:

8 sites produce £2.6m GM, £2m cost, £0.6m EBITDA
16 sites would be £5.1m GM, £1.2m EBITDA
Add, say 30% LFL growth gets you £6.7m GM, £2.7m EBITDA, still not even enough to cover the enormous £3m central overhead. Some franchising fees, etc. etc. but seems they have a long way to go to be profitable?

So even going great guns, they will only just be profitable. Call it £10m revenue and £0.5m profit. Mcap now is £35m, right? So it is now trading at 3.5x that revenue and 70x that profit estimate. Seems bonkers over-valued, even with some very generous assumptions about international expansion, etc.

What am I missing?

Investor presentation is here if anyone missed it: https://www.investormeetcompany.com/investor/meeting/preliminary-results-for-the-year-ended-31-december-2020

I think this share still has plenty to run, my next target is £7.50, which gets them back to around the market cap they had before the Korea and covid difficulties. Plus they now have more online sales (higher GM) and we should see more organic growth generally (need new crockery for that dinner party you can finally have?), so still plenty of upside.

I'm sticking with my analysis from back in October:

********
At first glance, you'd think this business was toast. £800k market cap, below last report of net assets
But, they have £1m in the bank still and surely worst is over?
YoY sales for Q1 of Y/E 30/6/2021 up by 23% (according to Pre-Close Trading Update from Sep 2020)
20% sales increase would get to around £9m revenue
48% GM = £4.3m
Looks like they have around £3.5m overhead now (from guidance in same update)
=> EBITDA of £800k for FY 2021?
Market cap now is only £800k
Very significant risk of whole business closing and share going to zero ... but if people don't go skiing this winter might they buy a new kitchen instead? ... worth a punt?

*****

We'll find out soon enough, they need to file accounts by end of March, and presumably there will be an indication of recent trading then, too. It'll either be curtains (share price zero), or prospect of an actual profit in 2021 (share price rockets)

I see they posted a recording of it later, which I've now watched. Same link as the original meeting if anyone else is looking for it.

I was unable to attend the webinar today (https://presentations.investormeetcompany.com/investor-meet-company/FRANCHISE-BRANDS-PLC-Final-results-for-the-year-ended-31-December-2020).

Would be very grateful if anyone here did attend and could share any insights from it? Thank you so much in advance.

Mano doesn't even need to demonstrate fraud, they only have a demonstrate that the director extracted money from the company which was not his / hers to extract. E.g. they took a dividend when there were insufficient profits to cover the dividend, or they just borrowed money from the company and never paid it back. Don't need to show fraud or malice or even that they definitely owe money to HMRC in particular. They just need to show that the director owed money to the company, and therefore now owe it to Mano. As the CEO mentioned in his presentation the other day, Mano plays an important role in holding these kinds of directors to account - people who have played fast and loose with company money and short-changed the company's creditors / HMRC / employees / whoever.

As I understand it, most cases settle out of court. In many cases, companies and directors will still presumably want to settle a case rather than just kick the can down the road, whether there is a threat of imminent winding up or not. At some point, this share will surely head back up to where it was before, around £5, and it is very hard to predict when that will be. I guess if Mano settle a few big cases for cash, they'll issue an RNS about that and the share price will strengthen again. I'm staying in, because it is very hard to predict when news will drop.

Thank you. It is an odd thing to call it. Seems like it should be called 'committed revenue' or 'annualised recurring revenue' (which coincidentally/confusingly is also abbreviated to ARR), rather than 'run rate'.

I'm looking at this share for the first time. It does indeed look undervalued, at ~£40m market cap on £15m EBITDA.

But their 27 Nov RNS mentions annualised revenue run-rate of only £34m. If I understand that correctly, that means they are only on track to do £34m over the next year, a huge drop from £50m in 2020.

Normally run-rate is quoted to support claims of growing revenues (e.g. something like "we now have a run rate of £10m revenue a month, that's £120m annualised"), not cited to support a big drop in revenue!

Have I misunderstood what they mean by run-rate?

Grateful for any input from those who have researched this share for a while. Thank you.