.

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 !!

An insight into the earlier trading statement (on the 19th of January) below from the Comms Dealer web site. A six month plan to migrate the high value customers of World Telecom over to Seven Telecom would mean by July 2005 the migration would be complete and World Telecom would have been no further use to Envesta. Pay 340K for it, migrate the customers across and then dispose of what is left for cash would be a very good move if that is what they have done, so if we do get an update to this effect in the results its been a very good move. Once you remove the higher margin part of its customers and get them on Seven Telecom and leave the low margin stuff the remainder of World Telecom is quite clearly not worth the same as you paid for it, but you have taken the most valuable part out with the migration.

The disposal of what was left of World Telecom after the customer migration was complete (30th June 2005 ?) could be part of the remedial action to be done in the early part of the new financial year (which started 1st July 2005).

The statement of intent to migrate in 6 months in the January trading statement below shows they were possibly planning to get rid of what was left of World Telecom as soon as migration of higher margin customers was complete as it would have no further use once they were moved to Seven Telecom. That would have been early in the new financial year and the trading statement released 28th of July only comments on business events to the 30th of June as is said in the first paragraph and does not make any comment on events from the 1st of July onwards)


http://212.21.97.148/magsites/cd/content/text/marketreports.asp?offset=100&ArticleID=17059

MARKET REPORTS
Seven Telecom acquires Airtime customer base
Seven Telecom, a subsidiary of Envesta Telecom, has acquired the customer base of The Airtime Group, which trades in the UK as World Telecom,.
The customer contracts acquired currently generate revenues in excess of 1million per annum at significant gross margin and the expected consideration, which is payable in cash, will be in the order of 340,000 dependant on performance of the customer contracts in the first six months following the acquisition.
The acquisition brings to the company significant multinational corporate customers from a number of industry sectors including banking and finance. Customers will be migrated to the Seven Telecom infrastructure during a six month migration plan.
Kevin Jauncey, executive chairman of Envesta Telecom, stated: "This is an exciting deal for Envesta Telecom as it brings additional substantial gross margin with little or no additional operating cost as services will be run using existing systems and infrastructure. It also brings a customer base of significant value and profile which will complement our existing wholesale business."

Trading Update
Envesta has announced that trading for the six months ended 31st December 2004, will show significant improvement on the same period from 2003.
The company has experienced continued high growth throughout the period, in particular during Christmas and New Year, achieving record levels of revenue for December.
This has contributed to an increase in revenue of more than 70% for the first half compared to the same period last year. Gross margin contribution is up over 120%, reflecting the Company`s concentration on higher quality and higher value business streams. This greater margin contribution combined with an increase in the efficiency of its specialist telephony infrastructure has resulted in the company experiencing significant net profit growth, as operating costs have not increased in line with revenues.
Un-audited like-for-like comparisons show that revenue for the period was in excess of 9m compared to 5.24m for the same period in 2003.

Is it possible that the recent spike up in this one was influenced by the Ebay purchase of Skype?

I am hoping it dips back down below 2.4p before the results come out on the 27th. If it does then I will add.

I will be adding too tallsiii.

There is a vicious deramping campaign on the AFN thread, with all sort of outrageous claims against the company. Its really got worse last week as it moved up and they are desperate to get the price down.

As I said to them, if they get the price down for later this week I will be buying more cheaply, if they do not I have to pay more.

There is a constant ramping campaign led by PapalPower on several BBs.

You mustn't forget that despite a small rise, this is still locked in a downtrend.

PP Hi,

advfn is the bashers place, thats all that exist over there on 'the dark side', losers and a-holes.

I don't care if they push prices down, it means I can buy cheaper, and when they eventually f'off to the next share to bash, value will return, and I will make a load of money.

Cheers,
PM