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Cloudbuy – AGM statement: it’s jam tomorrow (honest, this time, guv’!)

By Nigel Somerville | Tuesday 18 April 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

AIM-listed Cloudbuy (CBUY) this morning issued an AGM statement which offered yet more jam tomorrow, even more jam next year but the only jam today is the one the company seems to be in.

Having twice failed to remodel its business and now reliant on a white knight investor, the company is still burning through cash at a great rate of knots. My crystal ball says the business looks an interesting proposition (it always has, it has just never delivered) but that the funding will run out before the convoy of super-sized juggernauts of Hartley’s gets anywhere near the driveway.

Today we are told:

We continue to work closely with our customer NHS Shared Business Services to roll out the PHB Choices system for Personal Budget Holders to the 210 Clinical Commissioning Groups (CCG's). The Second Generation of the system was launched in March 2017, incorporating an improved look and feel and with further enhancements based on feedback from CCG's. We expect the number of PHB's transacting to increase significantly each month following the launch of this new version. This remains the key focus for the business to drive revenue in 2017 and particularly in 2018.

The marketplace for the Federation of Small Businesses ("FSB") was launched to its members this year, allowing users to buy products and services from members. The FSB is devoting significant resource to drive the success of their marketplace and take-up has been encouraging with 1,000 members registered to date and trading expected to start in early summer.

The development of the marketplace for United Overseas bank ("UOB") in Singapore has continued to progress with a focus on onboarding its preferred anchor suppliers before commencing their full marketing activity to attract buyers, which is expected in Q3 2017.

The outlook for the business remains challenging, however, management believes that cost reduction actions and a sharper focus on realistic revenue growth puts the Company in an improved position for 2017 and 2018.

In other words yadda yadda (no financials) blather blather (no numbers) blah blah things might get a little less dire in a year or more.

But will the company simply run out of cash before turning the corner?

I see little reason to hold the shares at the moment and continue to be concerned that cash is going to be a problem. I’d rather wait and pay more for a company that will survive than pony up for a portion of toast tomorrow, to go with the jam.

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