.

All is good capetown and lets have some more next week as well !

PP Hi,

6p is the short term chartists target, it won't go much further unless the results suggest a higher price, and a new trend, which it seems so far that they will :)



Cheers,
PM

Nice chart Paul and lots more to go in it.

Here is something I might have overlooked and maybe the long termers here can help. A lot of negative sentiment is around as so they say "Envesta has spent all the acquisition money".

I can find no reference to the Legal and General money raised to be used to any acquisition as it was purely to be used for growing the business and grow it has very much, growth has been so good (75% year on year to be reported soon) they have had this strain on the working cap.

So as so much has been said of Legal and General "acquisition?" money being spent I cannot find any reference to this statement and it clearly says of the Legal and General money "The funds will be used to finance the continuing growth of the company" and that is has.


For immediate release: 23 March 2005
Envesta Telecom raises 963,000 and secures first Institutional investor

Envesta Telecom plc ('Envesta Telecom' or the 'Company') the AIM quoted premium
international telephony provider today announces it has secured its first
institutional investor.

Legal & General Investment Management Ltd purchased 17,391,304 new ordinary
shares in the Company ('New Ordinary Shares') at 5.75 pence per share, providing the company with net proceeds of 962,500 after costs. Application has been made for admission of the New Ordinary Shares to trading on AIM and dealings are expected to commence on 31 March 2005.

Following the issue of shares Legal & General Investment Management Ltd will own 7.04% of the enlarged share Capital of 246,981,063 ordinary shares.

Commenting on the investment, Kevin Jauncey, Chairman of Envesta Telecom Plc
stated
'I am delighted to confirm that we have secured our first institutional
investor, this is a significant milestone in the progress of the Company. The
funds will be used to finance the continuing growth of the company as set out in the roadmap announced with the interim results. '


And the interim results just say they want to grow profitabilty and revenue of the company so where is the problem ?

This is the comment on the interims;

Outlook

Our roadmap for growth has delivered greater focus, enabling Envesta to further
strengthen and benefit from the existing infrastructure and resource expertise
within the business. We are adapting to the changing market conditions and
successfully bringing well targeted, high value products into the market, as
highlighted by the recent launch of Cheaper Call Rate, a product that
complements the wholesale business while adding a valuable consumer revenue
stream.

Cheaper Call Rate (www.cheapercallrate.com) is a retail international calling
product that delivers higher margins whilst continuing to utilise the Seven
Telecom Network asset more efficiently. It also uses most of the existing
back-office infrastructure that has been developed over the last two years. I am delighted to report that the product launched successfully on 28 February 2005, and looks set to deliver our expectations in the second half of this year, moving through to strong profitability in the next financial year.

Overall, the Company now has the appropriate operating cost base together with
growing revenue streams that will deliver strong growth in profitability. With
the new Cheaper Call Rate product coupled with the successful wholesale service, the Company has two solid lines of business to grow going forward.
The Board will also continue to explore acquisition opportunities with which to enhance earnings and value for shareholders. This may include diversification into complementary markets to realise returns from high quality investments.


And in the following time from there they did grow both the wholesale and retail sectors and now in the latest trading statement have said they will cap the wholesale where it is and grow it no longer but maintain those levels and grow the retail side more as this is higher margin business.

So what was the problem ? They have done exactly what they said they would and delivered with fantastic growth. Am I dumb ? Am I missing the point ? Or have they just done what they said they would but got too much growth ? And if yes is that bad ? I think not !

PP Hi,

The roadmap .... http://www.envestatelecom.com/strategic-roadmap.php


Phase 2 - Short to Medium Term

In line with the Company's acquisition plans a retail service provider would be added to the Envesta Telecom Group, thus allowing Seven Telecom to benefit from future 'double play' benefits in line with the introduction of the new technical infrastructure, coupled with the immediate benefits for the supply of International services for any existing international traffic requirements within the service provider.


I don't believe they have used all the capital, just chipped away at it, but it's not that important at the moment, because the circle of capital means it will return.

Capital has been spent growing the business, so we have more customers, more customers equals more profit, profit is capital, so the money for the aquisition will return.

There is no proof that EVS have even found a suitable RSP to purchase yet, so until they do, the money is better used to grow the business, at astonishing rates as we already know.

EVS don't think its a problem either, and they "will look to address this early in the new financial year".

Bashers are losers.

Cheers,
PM

Amazed nobody is looking at IDN !

Moneyman Hi,

I'm not amazed .... LOL !

I will leave it to PP to let you know why they are looking here not there, he posted the reasons yesterday if you want to check back .... they seemed quite reasoned and fair and right to me.

Cheers,
PM

Hi Paul and Moneyman

Yes I did post the reasons why EVS is a better bet at the moment than IDN, taking nothing away from IDN being a good mid to long term play, just the weakness as the ex CEO Willmot sells of his stake. Once he is clear then there are also many positives on IDN, but at this moment in time EVS appears to me one of the best.

I have put some more thought into my earlier post yesterday

On page 66 post 1313

and this with my original thoughts of my first post

On Page 59 post 1173


Now it is clear that the L&G money raised was to further expand the business and not to make any acquisition, it is plainly obvious that this is what has happened and fantastic growth has been achieved.

At the interim results the company had made growth of 75% over the previous first half. That is tremendous growth and they wanted to grow more and needed funds to do so. This was provided by L&G at 5.75p who were the first institutional investor. Why did they need the money ? The reason is the very nature of the wholesale market, they pay out money on 30 days and get back in 60 days is what is said. The more revenue you gain the more kitty you need to cover creditors and debtors. It is never cash lost from the accounts and is always there, but has to be used to cover the 30 days from out to in. The trading statement is clear there are no cash problems, the cash is tied up in the delayed payment of the wholesale sector and this presented a strain on the working cap.
What is the problem with that ? Nothing has been lost, its there and on the accounts ! Its getting tied up due to massive growth.

The trading statement showed that in the second half, to be reported at the results very soon, they have again increased revenue, this time by over 100% over the first half taking this past year revenue up 75% year on year. Again they need to provide cover for the cash out to cash in and due to this fantastic growth have some strain on the working cap. There is no problem with that, cash has not been lost or gone it is held up on the accounts ledger covering out and in.

What were the growth figures ?

We know interim revenue was 9.1 million (75% up on previous first half). They raised 963K from the L&G placing for the second half growth to cover the additional demands on cash out to cash in.

The second half is in line with present estimates as is over 100% up on the first half. The figure is forecast to be around 22 million. Now this superb gain was likely in excess of the managements forecasts, had they known this was going to happen I am sure they would have raised a bit more from L&G and not 963K.

If they estimated the ability to get a 100% increase on first half in the second half they would have been targeting around 18 million revenue, but it appears they got 22 million. The 963K was likely in part to cover set up and marketing costs of CCR and be that cover for cash in and out on the estimated growth, and owing to the growth potentially being better than forecast the 963K has been tested to the limit. Also they have potentially expensed some of the expenditure on infrastructure expansion (meaning underlying profitability is higher than the forecast 1.1 million PBT).

So we have now approx 22 million revenue to be reported soon with a 1.1 million PBT and EPS of 0.34p and forecast 32 million for the coming year (another 50% increase). They will plan to expand more but will not have the initial start up costs of CCR so will have more money from profits to cover for the cash out and in. This growth is not on the wholesale side but on the retail side which offers higher margins and more profit. This would be the reason they are expanding retail and not wholesale as profitability improves and this reduces strain on the working cap as well.

On this basis on a supposed revenue increase of 9 to 18 and needing 963K ( but this also includes some CCR set up and marketing costs) and with a planned increase of 22 to 32 for the present year, (but growth on the retail side) but also taking into account they have more profits to put back in all they would require to take them through IF they needed it would be NOT a very large placing with L&G again (or a second institution) BUT I think they can manage the strain if they know how to hedge. This would with the increased profits and higher margin retail business leave them around December this year (or before) being free from any amount of strain on the working cap, the higher strain time I think would have been the start of the new financial year (1st of July) but the longer it goes on with higher margin business increasing then the strain will be reduced (as you note they planned no further expansion of the wholesale side as this is the one which gives the highest strain due to the longer delay from out to in). If they got the necessary growth on the retail side in July/August they could as remedial action limit the wholesale side which would have the effect of reducing working cap strain.

They SHOULD be able to work it so that they do not need to address this issue with a small institutional placing and SHOULD be able to wait, if its needed, until such time as they want to do an acquisition if they plan to. Why even then ? With big plans and phenomenal growth prospects they should be diligent to ensure that they plan well ahead for it and never encounter this technical problem again. A short term small bank loan would also easily cover if needed to get them past the period of strain if the strain was heavier than just light. We will know very soon but to repeat again, any placing should it ever happen is due to massive growth and the need to cover for cash out to in delays. The money is there but the kitty needed to cover becomes larger as revenue increases. The move to the retail side and offers higher margin business which will also relieve this out to in cover required.

The future is very bright and this company is growing at a massive rate, which is rare to find. The Corporate Synergy updated 9th September forecast is for 1.1 million PBT at the coming results with EPS of 0.34p and then for this coming year (which started 1st of July) is for PBT of 2.0 million and EPS of 0.66p. This means at the results when the 2006 forecast becomes present year, at a price of 4p we are on a current year PER of just times 6, and with no debt and a tiny PEG value it should be, I feel, on a current year PER of times 20 if the results are good and with no problems (which is 13.2p).

I remain very optimistic and am holding and will add and will be holding that stake on results day morning coming soon in expectation of good news. Envesta is about revenue growth, profit growth and earnings growth and EVEN IF they do require a short term solution to short term working cap strain caused by growth and expanding revenue growth opportunity to allow more and more growth, I am very happy with a company that takes money and makes more money with it to increase profits and earnings per share. If it is going as well as is said then there would be no reason to rule out a morale boosting dividend sometime in 2006 (full year would not seem unreasonable)

I would recommend everyone do their own research, the above is just my view and opinions and I may be totally wrong but hope and think I am not in most of it or even all of it would be nice. For the very latest broker forecast summary figures you can see them yourselves on Hemscott Premium (Hemscott). The mention to this is because the very latest ones can only be seen on Premium and not Free.

Papalpower thanks for the last post!!!!!

Chat soon when we at 6p friday i thinks

6p be Friday would be great but a few more percentage points up from where we are at now by the end of the week would also be good. I see a growing company with great revenue, profits and earnings and in time (quick or not) the true value should come through and I see this as a figure of over 10p when the new broker forecast 2007 figures are released very soon.

Papal,i see the price by friday at3.85,lets see,as you say small ticks up daily are much better than roller coaster rides for long term.
I am away all week so will be anxious to see whats going on.

Small or large ticks up will be good, I think the big move up comes on results day and the days following that once confidence is at its highest given this share appears to have been totally deramped by the ex-dealers. It looks to me like the dealers were on the threads some time ago trying to link people into CCR through their own dealer sites. They did not like the commission levels they got and decided to then try to slate the company and trash the share price by continuous deramping. The facts and the figures will see this good on results day (1.1 million PBT and EPS of 0.34p).

As shareholders we should be happy that the dealers get minimal commission, as its more earnings for our company, and I think many many people are using CCR through the company site (and corporate users) so there is no dealer commission to pay anyway, which is more profit for the company.

squidd this one is for you as I know you like to follow ULT and now you are here in EVS, someone did a comparison of ULT to EVS and this is what it looks like;


nghomi - 18 Sep'05 - 09:27

EVS is not the first and it will not be the last company, which would have straining of working capital. The company will consider all things and raising fund through placing is one of many options that they will consider.Look at ULT for example. A few months ago they raised 500k for the working capital. Since then the share price has quadrupled. I have noticed that a few people who are reading this board have got some holdings in ULT. As ULT share price has quadrupled from its low recently, I have decided to compare EVS with ULT.

..........ULTEVS
Market cap27m..7.5m
Revenue907k.22m
Profit.(576k)1.1m

Note that ULT has made a loss of 576k while EVS has made a profit of 1.1m. Admittedly the new NICE recommendation will hopefully generate a lot of new business for ULT. However, ULT has to increase their revenue by 20 fold to have the same revenue as EVS. Nobody can believe that EVS share price will be 20 fold but I believe that EVS share price will at least quadrupled from its low of 2.25p in three months time. My three months target is not less than 9p.

I don`t know where you find the time Papal but keep up the excellent research,i like the comparision Papal but just wish it was that easy.

DB66

PP Hi,

Good work, EVS clearly worth a lot more, I reckon around 5p on the day before results appear, and a 9p+ high within 2 days.

Cheers,
PM

PpP: Thanks for the post 328. which I thought interesting though meaningless, because these companies are as chalk and cheese. I've done my own comparisons using chart overlays and find that during the past month since Aug 18th ULT and EVS had risen by the same amount and both suffered a similar fall on Friday. This could mean that a rise, in whatever company, will trigger a corresponding correction on the 4th Friday, though I think not.
I'm backing both companies strongly, though I expect ULT to outpace EVS in the long term, because it has more potential customers and fewer competitors, but that's just my guess. It's going to be an interesting race.

Morning all and good luck for the week with all the stocks.

squidd the race is on and watching both with interest and holdings.

Squidd/PP Hi,

If you want a race, I put forward SEO and AEX. Watch 'em go over the next few weeks, months, and years :)

Cheers,
PM

Oops Wrong thread !!