In Cup Plus Share Discussion Threads

[blueliner] 28/11/2005 19:30

There is something obviously seriously wrong with a co that continues to be unable to recruit/retain its sales force, reading between the lines, has too much been expected of the few they had.
Are the working conditions that terrible or the hours so antisocial that nobody wants to sell these m/c's
Interested to hear the thoughts of someone in the industry as this co's story looked one of the more interesting floats this year.
Not holding

[jonwig] 28/11/2005 18:58

Seems they still can't recruit and retain sales people. Why is that such a problem?
Not a holder.

[siskinbird] 28/9/2005 21:56

Sorry - Interims were today, not Thursday. No surprises as far as I can see, but I'd comment as follows:-
- the statement about 25 machines per month in 2006 is a little disappointing given the original targets
- I'd like to know more about the size of these "high profile" customers
- I'm encouraged by the statement about their confidence in the business model.

Any other views??

IN CUP PLUS PLC ('IN CUP PLUS')

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2005


Highlights:


• Significant progress made since admission to AIM in March 2005

• Sales completed to high profile customers with prospects of multiple future
orders

• Strengthened board through appointment of Kevin Mills as managing director
of E Break Limited

• Careful management of costs

• Cash balances of £1.2m at 30 June 2005

• Focus on converting the significant interest in machines into sales and to
continue to generate new leads


Martin Colenutt, Chairman of In Cup Plus PLC comments:


'The directors believe that the first half of 2005 has been a period of
significant progress for In Cup Plus and its trading subsidiary E Break Limited.
Whilst the sales position so far this year has been frustrating, the directors
are encouraged by the progress of the group in many other areas and the market
reception we have received. We are optimistic that good progress will be made
in the final quarter of 2005 and look forward with confidence to the future.'

CHAIRMAN'S STATEMENT

The directors believe that the first half of 2005 has been a period of
significant progress for In Cup Plus and its trading subsidiary E Break Limited.

The admission of the shares of In Cup Plus to AIM and the associated fund
raising in March was an essential step in the establishment of an
infrastructure, which will support the operations of the group, until it becomes
profitable.

I am pleased to report that based on market reaction to date we have reason to
be confident that the business model presented to investors in March will be
successful.

Our core machine, the In Cup Plus Xen-1550, is being manufactured to a very high
standard. Sales (which represents machines installed in customers' premises)
for the six months to June were 18 machines. Since June, we have sold 18
machines and as at 9th September had received orders for another 21 Xen
machines.

On 14 September, we announced that sales of machines for the first half had been
lower than expected and that revenues for the year to December 2005 would be
significantly below market expectations. As explained in that announcement, the
principal reason for the underperformance is that it has taken more time than
anticipated to build the sales force required. This is primarily due to
difficulties in finding suitable candidates. The shortfall in machine sales has
also impacted upon ingredient sales.

The board acknowledges that the trading position is behind target but remains
optimistic of the sales prospects for the future. The significant losses made
in the first half year are due to slower than anticipated revenue generation.
However, we have invested heavily in people, stock and infrastructure and great
care is being taken to ensure that future spending directly relates to revenue
generating activity. We do not expect the slow start in revenue generation to
affect the company's medium to long term prospects or its ability to make
progress in the immediate future.

The key challenge for the remainder of 2005 and 2006 will be to convert the
significant interest in our machine into sales and to continue to generate new
leads. We are selling to high profile customers. Many of the customers to whom
we have already sold machines offer the prospect of multiple future orders. We
are selling into large organisations in the public and private sectors as well
as smaller independent companies.

The directors believe that we have now established a capable and motivated sales
force and the most experienced members of the sales team are exceeding their
personal monthly targets. The current sales force will target monthly sales of
25 machines during 2006 and the board will seek to grow selectively the sales
force next year.

The delay in building the sales force, whilst not welcome, has enabled
management to focus on developing an appropriate operational and technical
infrastructure to support the increasing momentum being enjoyed by our business.
We are delivering consistently well-built machines, which are easily and
quickly installed and have required minimal post-installation maintenance from
the group. Ingredient logistics have been enhanced and customer satisfaction
levels are very encouraging. Our forecasts for selling prices and ingredients
consumption per machine are in line with previous expectations.

Costs have been carefully managed and available cash balances at 30 June 2005
were £1.2m. On the basis of current projections the board is confident that the
company has sufficient cash for its needs.

At the beginning of September, we welcomed Kevin Mills as Managing Director of E
Break Limited. Kevin brings a diverse range of skills and experience to the
business. His recruitment will enable Barry Marks to make further technical
developments to our machine offering, assist in key account development and
explore opportunities for expanding into new geographical markets.

Whilst the sales position so far this year has been frustrating, the directors
are encouraged by the progress of the group in many other areas and the market
reception we have received. We are optimistic that good progress will be made
in the final quarter of 2005 and look forward with confidence to the future.

M Colenutt
Chairman

[siskinbird] 27/9/2005 09:59

Up a couple of notches on some buying this morning - has someone got wind of something good in the interims on Thursday?

[siskinbird] 22/9/2005 10:21

Well spotted jonwig - looks as if that article has encouraged a couple of buys.

[alter ego] 22/9/2005 10:14

thanks for that jonwig

[jonwig] 22/9/2005 09:19

For holders out there, Shares Mag today has an update. (I don't hold myself, but keep an eye out occasionally):

"Shares in vending machines
business In Cup have taken a hit
and fallen from our tip price 8.25p
(11 Aug) after slower- than-expected
sales. But the problem is getting
sales people on the ground and is
not with the machines themselves.
Orders for 57 machines have
already been bagged and 100 are
predicted to have been sold by the
end of the year. Building momentum
is a slow process but the mediumterm
prospects remain good. As a
start-up firm, a cautious approach is
needed, hence our hold
recommendation."

[siskinbird] 21/9/2005 12:03

Oh dear - this is looking grim.

[siskinbird] 14/9/2005 09:54

I think the RNS is supposed to mean that sales are behind the planned levels because of a slow start in recruiting the sales force. However what it fails to say is whether or not the full sales force is now in place.
I'm just looking back through the info that Daniel Stewart put out for the floatation. It says that they expect to sell 300 machines in FY05. Today's RNS reduces this to 100. And it says they expect to sell 599 machines in FY06, so I guess the big question is whether this is still the company's target.
Actually it's good to see the share price struggling back up to the flotation value. I hold, and still have confidence in this product. As ever, the question is whether management can deliver.

[amg72] 14/9/2005 09:29

I still think it's a good medium term investment. 10% price recovery from the opening drop in encouraging.

[cezary] 14/9/2005 08:37

I think this is a badly worded RNS.
This seems to be standard procedure for most AIM companies.
Does it imply that the sales are there but cant finalise them because of shortage of staff or does it imply that they need more staff to chase down the orders.

[yearofthedog] 14/9/2005 07:54

ouch! savage markdown, is there worse to come?

[inntolife] 03/9/2005 20:23

Chay01 was that the same article as the 19th August?

[chay01] 02/9/2005 10:17

Buy In Cup Plus at 9.75p

Says Rob Cullum of Trendwatch.co.uk

BRITISH PLUMBING HAS a reputation for being the worst in the developed world. Every morning and evening, millions of us clean our teeth using water from an open or unsealed tank in the loft. On the surface of the water is an interesting scum of house dust, pollen, lead and soot from vehicular pollution, glass fibre shards, lime-scale, dead spiders and other creepy-crawlies, perhaps a sprinkling of mouse excrement and, if we're really unlucky, the decomposition products of a dead bird. During the summer, the water heats up to a nice, tepid temperature, ideal for brewing up a bacterial soup.

When you look it in that way, it's almost a relief to leave home in favour of the regularly cleaned and serviced office environment - except, of course, that it isn't. Apart from the fact that a recent survey found that a computer keyboard in an FT office was many times more contaminated than a toilet seat, the office drinks vending machine could almost have been designed to deliver refreshment one hundred times more contaminated than your teeth-cleaning water at home.
The design of today's vending machines dates back to the 1950s. With their water reservoirs and spaghetti of plastic pipes, they're almost impossible to clean and disinfect properly - about the only thing that tastes worse than vending machine coffee is disinfectant-flavoured vending machine coffee. According to a government environmental health paper, 23% of nozzles on sampled machines were infected with E.coli, the human gut bacterium. (Don't ask!).

Enter In Cup Plus, which floated on AIM in March 2005. Chief executive Barry Marks has gone back to the drawing board and designed a vending machine that seems to have everything going for it. Hygienically sealed cartridges containing about 500 drinks deliver dry ingredients straight to the cup. Water is fed straight from the tap to the cup, doing away with the spaghetti.

The machine costs about 3,000 pounds, around half the cost of competitors' designs. Servicing costs are all but eliminated. If the machine does break down, in-built telemetry can call for service automatically.

The business model proposes two income streams. First, the machine is leased for about 20 pounds a week, or just over 1,000 pounds a year. Second, In Cup proposes to charge the client 10p per drink, including the cup. Realistically, each machine might dispense, say 16,000 drinks a year, or 1,600 pounds. In Cup says that 75% of this, or 1,200 pounds is clear profit. So one machine can generate revenue of 1,000 pounds + 1,200 pounds = 2,200 pounds a year.

Even if the company only wins contracts for 1,000 machines, that represents revenue of 2.2 million pounds a year. It should manage to do hugely better than that. There is an estimated 0.2m drinks vending machines in the UK alone. About 40,000 come up for contract renewal every year.

House broker Daniel Stewart has pencilled in sales of 1.3 million pounds this year, 3.6 million next year and 5.3 million pounds in 2007. After initial start-up losses, it should make 0.6 million profit next year and 1.2 million pounds in 2007.

There is downside risk to this share. It's effectively a start-up. As with any new business, there's always the possibility that something will go badly wrong. Problems in ramping up production, perhaps; or unexpected problems with the machines; lower sales than anticipated or a new competitor springing up. The business model looks robust enough, but you just never know.
Nevertheless, I think the business proposition of this company is compelling, and certainly worth the risk. BUY


Key Data
EPIC: ICU
NMS 10,000
Spread 9.5p - 10p
Market Cap - 9.5 million pounds

[mdchand] 19/8/2005 15:48

heavily tipped in trendwatch yesterday - very similar critique to share's opinion last week.

[siskinbird] 12/8/2005 10:49

AMG72
Thanks very much. Let's hope we get some news on these contracts soon!

[amg72] 12/8/2005 10:16

Siskinbird, here's the article:-

In Cup Plus makes and distributes vending machines, the sort you generally find in offices,hospitals and train stations throughout Britain, Europe and the US. While there are dozens of vending machine types in operation in the UK, most of them are made to 1950s specs and have inner workings to turn the stomach. These old-fashioned machines were mentioned in a government environmental
health paper. Its findings showed that 80% of oldstyle vending machines were not properly cleaned and disinfected and, worse still, a staggering 23% were infected with E.coli.
In Cup Plus does things differently. Its founder and chief exec Barry Marks has designed a vending system that is not a health hazard. It is based on hygienically-sealed cartridges that deliver
ingredients straight to the cup, rather than along a series of manky old
tubes. When they empty, the operator simply pulls the old one out and
replaces it with a new one. It takes seconds. The water too goes directly
from the tap inside the machine to the cup.
The business model is straight-forward. In Cup makes the vending
machine and leases it for about £20 a week – next to nothing for big
corporate clients that may order several per office. The company then
sells the client ingredient refills: coffee, tea, chocolate, powdered milk
and even cold drinks such as orange. All are contained in the same safe,
disposable cartridges.
This means that as In Cup leases more and more machines, so it will
sell an increasing number of refills. In Cup has had to start from scratch
but is expected to unveil a series of contracts soon. One high-profile, but
unnamed, corporate has said, 'make it work for two weeks and we'll buy
100 machines.'
If we supposed each machine is supplied with three 500-cup cartridges
a month, that's 3,600 cartridges, or 1.8 million drinks a year. Average it at
10p per drink, including the cup cost, that's £180,000. In Cup reckons for
every £1 of sales, it makes 75p clear profit. So that's £135,000, plus the
£104,000-a-year on lease income – that's just £239,000 in revenue a year
on 100 machines. A stock of 500 machines would earn £1.2 million a
year; 1,000 – £2.39 million.
This is just the tip of the iceberg. There are thought to be around
200,000 vending machines in the UK and Marks reckons 20% of them
come up for contract renewal every year.
House broker Daniel Stewart reckons In Cup will have sales of £1.3
million this year, rising to £3.6 million and £5.3 million in 2006
and 2007. Manufacturing and sales start-up costs will mean
losses this year but the company should see close to £600,000 pretax
profit next year and double that the year after.
Beyond the short-term, In Cup looks likely to be bought out.
Marks has fielded several enquiries already, and while a £2
million bid a year ago would have been good enough, not now. In
Cup's float was so well received it ended up raising more than
double the £1 million it was after, and now has a market value of £8
million. It'd probably take £12 million to £15 million to strike a
deal now. On the downside, the shares are
a tightly-held stock. Some 44% remain in the hands of Marks, while
another 9% are owned by a single institution. This means the spread is
fairly chunky – just over 11%. However, small company market-maker
Winterflood took a larger than normal stake on flotation so there should
be a half-decent free-float.
by: Steven Frazer
LAYS OF THE WEEK
In Cup has a great opportunity before it but the company is likely
to be bought out, possibly sooner rather than later. The stock is
tightly-held but should command a lofty premium to current levels
within a year.
BUSINESS:
Vending machines designer,
manufacturer and ingredients
supplier.
VITAL STATS:
Market value: £8 million
Historic PE 2004: n/a
Prospective PE for 2005: n/a
Prospective PE for 2006: 16.5
Sector PE (Next 12 months): 13.2
1-month relative strength: -1.1%
1-year relative strength: n/a
Dividend yield 05: n/a
NMS: 10,000
Spread: 11.429%

[siskinbird] 11/8/2005 20:34

Can anyone post the Shares mag article here please? TIA

[tonyx] 11/8/2005 15:39

Not much movement considering the buys today-MM must have a few to offload.

I understand company is putting itself in the shop window-I reckon 15p per share is a nice takeout price.

[amg72] 11/8/2005 08:07

Just seen the PDF file write up in shares mag, there could be a lot of interest in this one today

[tonyx] 11/8/2005 08:04

Tipped in SHARES mag today.

[siskinbird] 18/7/2005 20:33

Cezary
You are not wrong - totally useless! Worrying, to say the least. I've e-mailed the company to ask for an explanation, and also asked if they are able to give any indications of how business is going. I'll post anything I get back.

[siskinbird] 02/6/2005 23:10

seangwhite
I don't understand your comment - the price hasn't chnaged today, as far as I can see. What happened yesterday is interesting though - 1.2m shares sold and the price goes up slightly? I tend not to follow day-to-day movements and my knowledge of the different types of trades etc is none-existent, but I suspect something is afoot if so many shares are changing hands.....Any views?

[seangwhite] 02/6/2005 15:47

Another 10k buy and the price goes up 28% unreal