Eruma Share Discussion Threads

[backmarker] 01/4/2011 08:54

this business seems to be about Illuminex now and whether they can develop that fast enough. there's a chance, but in tight times many companies may prefer to change lightbulbs expensively than invest in something that needs capex and will only save money over time.

the bomb-proof windows are a fantastic product, but how many have they sold ? the threat to those who might buy and can afford them seems to be much reduced. historically I think a large amount of the losses up to a couple of years ago was R&D on these.

I thought they might get somewhere with the anti-ramraider devices, but again that seems to be an excellent product with insufficient buyers, as we haven't had an RNS about them for a while.

and we haven't heard anything recently involving Pentagon, so I assume that initiative didn't come to much.

you can't say they are not trying, but imho their survival depends on Illuminex
- or the depth of the directors pockets.

[naviskram] 30/3/2011 09:35

Not much happening on this thread? Times today Deal of the day, Not much of a new contract but could grow. Any body any thoughts on it??????? Just bought in after thay went down, probable for the short term. Any body awake?

[cyprussteve] 08/3/2011 14:50

Hi soft,
I am the first to accept that this share is EXTREMELY high risk, and we definitely need some good contract wins to set the Company up financially - it is very much a speculative punt, and is basically "sxxt or bust" - but, if they can get some good contract wins, the share price could fly.
I have only taken a very small holding here, just to see how it plays out - of course, there is a danger that if they do announce good news, some of the investors may sell out on the spike.
It is not my normal type of investment at all, to be honest - but, I fancied a "flutter" :)
I much prefer CON as a medium term steady growth share which I think is greatly undervalued - although, of course, no share is without risk !!
See link below.
Ciao
Steve

[soft t] 08/3/2011 13:20

thank you cyprus the financial slot here says 16000000 shares in issue so your numbers must be before some consolidatio or similar if it is 16 million any real or modest immprovement will push the shares up sharply just my opinion

[cyprussteve] 08/3/2011 12:36

Ref Directors shareholdings:
The last figures I could find - not up to date - are in the 2009 annual report.
By my calculation there are 205m shares in issue - please feel free to check these figures and correct me if I am wrong.



Directors' Report (continued)

Details of directors‟ beneficial interest in shares are as follows:
31 December


Philip Barnett
100,000 -

Kevin Coffey
4,150,000 - 2%

Alan Davis
1,468,751 - 0.7%

Wayne Money
15,425,773 - 7.5%

Brian Wilkins
15,060,350 - 7.3%

[soft t] 03/3/2011 21:18

how much stock do the directors hold?

[cyprussteve] 19/2/2011 09:31

Hi Bookie,
I don't agree with all your points - but, that matters not - I totally agree with you that the Company's trading record has been very poor.
However, the very fact that the market cap is only £1m, and the Directors have been happy to support it with working capital, which surely they would not do unless they had reason to feel confident, is something that I see as a major positive.
With such a low market cap, it would only take a couple of reasonably good contract wins to totally transform the Company.
As always, we pay our money, and take our choice, and I totally understand the points that you are making.
Best wishes
Steve

[bookiebuster] 18/2/2011 22:02

"looks like they achieve a gross profit of 35%"

Its just creative accounting there's no gross profit here. Listing distribution costs separately understates the real loss-making sales margin. Minus figures every year

H1 2010: £0.49m sales -£0.57m full cost of sales = negative sales margin of -16%

Add on the -£0.8m yearly admin expenses, mostly salaries, tells you what this listing is really about. A 'salary muncher'

[dropside] 18/2/2011 21:06

"The reality is ERUs trading history is truly dire"

So it is. Long term holders will have a better handle on the past performance of the board than me.

BookieBuster, I take it the £0.8m is from the Interims - Current Liabilities - Trade and other payables? As you say, it has to be paid off by June 2011 but they seem able to run around this level year on year so I think the effect on cashflow should be fairly neutral if the debt is repaid as another debt is incurred. I agree it is an uncomfortably high level in relation to turnover.

The big risk here is indeed cashflow. Until (or if) they become truly cash generating. they will need to be able to periodically raise funds. The directors have shown themselves willing to support this to date. However this is the risk and it is why the share is not a 'widows and orphans' stock in any way.

The other side is sales. It looks like they achieve a gross profit of 35%. This has not been enough, combined with anaemic sales revenue, to climb out of being a loss-maker. The indications are that sales are taking off strongly. If this is simply because they are desperately slashing margins as you imply then we are on the road to bankruptcy. I do not believe the directors would be supporting the company with their own personal cash (remember the finance director put in £135K as I recall and he saw the books!) in this scenario.

I would not make this a big part of my portfolio personally but am very happy to take a stake here. The directors will lose far more than me if it goes wrong! If it goes right, and I feel this is the more likely outcome, then we will have a major re-rating of the share price. As said above - time will tell!

[cyprussteve] 18/2/2011 19:44

All fair comment , BookieBuster - that is why it is so cheap.
If you think they will not improve - then don't buy - simple - but, why would the Directors be supporting it if they were not confident.
Who knows - you may be right - I may be right - only time will tell.
Ciao
Steve

[bookiebuster] 18/2/2011 19:23

Why would a low market cap in itself be "highly attractive"... Mug punter logic

Try PLUS or the OTC market, plenty of microcaps there (loss-making ones like this)

"they appear to have an edge that is allowing them to punch above their weight"

Nice ramp but the reality is ERUs trading history is truly dire

Period / Sales / -Costs / Net Loss
FY2002 / £0.1m / -£0.3m / -£0.2m
FY2003 / £0.1m / -£0.4m / -£0.3m
FY2004 / £0.2m / -£0.6m / -£0.4m
FY2005 / £0.1m / -£0.5m / -£0.4m
FY2006 / £0.6m / -£1.4m / -£0.8m
FY2007 / £0.9m / -£1.8m / -£0.9m
FY2008 / £0.7m / -£2.1m / -£1.4m
FY2009 / £0.9m / -£1.9m / -£1.0m
FY2010(e)£0.9m / -£1.9m / -£1.0m

Net loss of -£1m a year (around -£100k/month)

Sales figures show no demand for product. They win occasional small contracts by offering them at heavily discounted prices (gross margin always in minus figures)

Net payables -£1.4m (£0.8m to be repaid by June 2011)
Estimated cash at Feb 2011: zero (and well into the overdraft)

[cyprussteve] 18/2/2011 19:13

Hi dropside,
Totally agreed - the Director's are not financing it for fun - it would be difficult to buy an AIM listed cash shell for this amount !!

[dropside] 18/2/2011 18:54

Good summary! My thinking too and that is why I bought in today.
ERU has done almost nothing for the last five years and that really accounts for the low current share price. Since buying the lighting business just over 3 years ago though they have been making progress steadily and sales are now showing strong signs of taking off. If more evidence of these sales comes through, and they can finance the working capital - and I believe they can as Steve says above - then we are quite likely looking at a significant and rapid re-rating of the market capitalisation.

[cyprussteve] 18/2/2011 18:31

With a market cap of only £1m, this is definitely a highly attractive - but , also, a high risk share, with huge potential upside.
My own best guess is that the most likely outcome with this company is that as volume grows (as long as they can keep financing it, as it seems they can, as they seem to have deep pockets) then they will attract attention from the big boys - then they will be bought out, their market cap is far cheaper than the cost of developing technology themselves (including getting round patents) and they appear to have some good products in what is sadly a growing market.. I doubt they are the only people in the market but they appear to have an edge that is allowing them to 'punch above their weight'.
The Directors have financed the Company with working capital, and, they did not get to be wealthy people by throwing their money away.
It would only take a few large contracts for this one to take off, and they operate in what is a growth market.
See Director's shareholdings in link below.

[taz14] 18/2/2011 12:20

agree with you. The mm's are short of stock after wednesdays surge. They did their best yesterday to shake a few weak holders off but failed as more have bought. They need the stock so it has to go up. 10p by next week is my guess

[simonparker5] 18/2/2011 11:30

Top of the leader board. Still a crazy valution for a company with so much potential. With only 16m shares this could really take off.

[tday] 17/2/2011 18:26

pre, 10 times what? A very low number.

[pre] 16/2/2011 12:41

sales over 10 times the comparable total order value based on today's contract wins....they've done extremely well....

[tday] 16/2/2011 12:34

Mildly encouraging news but, if the company is still loss making, more than 5 years after floating on AIM, it does reflect badly on management and rightly so.

Being profitless for that long, might be acceptable for an oil exploration company or a biotech but not Eruma.

[pre] 16/2/2011 11:22

just noticed this....well done to management here....gotta be re-rated now....

like this bit of the rns:

'...Eruma Chairman David Alexander said, "The whole team is focussed on building sales so we are delighted to have won these contracts, which represent over ten times the total order value for the comparable period for Illuminex in 2010...'

[ibs7491] 26/1/2011 11:40

must be something even rising on sales??

[backmarker] 26/1/2011 11:15

well something's got the share price rebounding. is there a bid in the offing?

[tday] 21/1/2011 15:57

The last RNS regarding contract wins was in May 2010 and then only for £85,000.If there have been further contract gains, why has no announcement been made? After all the shareholders could do with some good news.

On the other hand, perhaps the continuing inexorable slide in the share price, is indicative of a lack of substantial new orders?

[tday] 17/12/2010 13:54

Perhaps the new(ish) FD ought to bung in another £100k at 9p per share.

[bantam175] 10/12/2010 15:03

Been no contract wins announced for a while now. Big loss here atm.