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Diamond & Emerald Exchange

Platform:
Seedrs
Stage:
Expansion
Industry:
Retail
Location:
UK - London
Date Rated:
28/03/17
Raise:
£60,000
Equity:
15%
Valuation (Pre Money):
£340,000
Industry: Retail
Location: UK - London
Platform: Seedrs
£60,000 Expansion
Valuation: £400,000
Date Rated: 23/03/17

MANAGEMENT

PRODUCT

INVESTMENT
Tax Status: EIS

Business Summary

Diamond and Emerald Exchange (LDE) is an online jeweller that distributes precious gems to both businesses and consumers. The company was founded at the end of 2013 and is now trading profitably. LDE operates as the exclusive distribution company of IEEX (International Emerald Exchange) within Europe. This round of investment will be used for marketing and growing the team.

Financial Overview

Dec-20
Date (y/e) Dec-16 Dec-17 Dec-18 Dec-19 Dec-20
Sales Dec-16£87,663 Dec-17£300,000 Dec-18£500,000 Dec-19£750,000 Dec-20£1,250,000
Gross Profit Dec-16£35,319 Dec-17£130,000 Dec-18£220,000 Dec-19£335,000 Dec-20£575,000
GP as % sales Dec-1640% Dec-1743% Dec-1844% Dec-1945% Dec-2046%
Overheads Dec-16£31,789 Dec-17£97,805 Dec-18£151,546 Dec-19£197,877 Dec-20£267,040
Operating Profit Dec-16£3,530 Dec-17£32,195 Dec-18£68,454 Dec-19£137,123 Dec-20£307,960
OP as % sales Dec-164% Dec-1711% Dec-1814% Dec-1918% Dec-2025%
Closing Cash Dec-16£0,010 Dec-17£87,553 Dec-18£261,313 Dec-19£381,590 £681,388

Note: This financial information has been sourced from the company on 22/03/2017 or from public sources. Financial data is NOT verified by Wheatfromchaff Ltd.
49%
SKILLS:
EXPERIENCE:
COMMITMENT:
The MD has a varied skills set across a number of industries, and he would have gained invaluable leadership qualities from the Royal Navy. Other key roles will be filled full time post-funding.
Some of the team have experience in the jewellery industry. This is however the first start-up any of them have undertaken and we feel the assistance of an advisor would be beneficial.
The MD remains in the Royal Naval Reserve but otherwise is committed full-time. He has not drawn a salary to date and it remains modest although c £24k of loans will be repaid.
68%
MARKET:
PRODUCT:
COMPETITION:
The global jewellery market is expected to reach $257 billion in 2017. The online segment current accounts for c.5%, but is set to capture 10% of the market by 2020.
The customer testimonials are very pleasing and suggest that LDE add a personal touch with the online service. The company has also been shortlisted for a number of awards since launching.
There are established online players in the jewellery industry, but LDE has exclusive relationships with emerald suppliers in South America. Not holding stock is also a cost advantage.
69%
PROFITABILITY:
CASHFLOW:
RETURNS:
We feel that the overheads are somewhat understated considering the plan to employ six full-time employees. The company has however proven it can be profitable and the forecast is achievable.
The cash cycle risk is low as the company does not hold stock. Although further funding is required in 2018, there is considerable headroom in the plan.
The exit strategy is not outlined, but luxury items can attract high EBITDA multiples. This low entry valuation provides investors every chance in seeing a tenfold return if the plan is delivered.


Conclusion

Diamond & Emerald Exchange has proven its model in the past three years gaining a decent following which has generated positive customer testimonials for the service and has allowed them to reach financial break-even. There are a number of established players in the online jewellery market, but as the industry is showing strong growth it is a great time for LDE to be expanding.

We do question the claim of the company to have generated £417k in its first financial year of trading given the financials they have provided show last year's revenue amounting to £87k and this year's forecast at £300k. Nevertheless, the forecast is certainly achievable and we feel there is major upside if the international expansion is delivered. The low entry valuation therefore gives investors chance in seeing very strong returns.

Investors also interested in the product itself can enjoy 30% off their first purchase if they invest over £1,000.

Related Links

Seedrs Pitch

www.londonde.com

 

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The Ratings we publish have been approved and issued at Financial Promotions in the United Kingdom by Wheatfromchaff in the United Kingdom who is Authorised and Regulated by the Financial Conduct Authority FRN: 751017. Wheatfromchaff Limited registered office is Kilver Court, Kilver Street, Shepton Mallet, Somerset, BA4 5NF and telephone number +44 (0) 1749 347 577. Telephone calls may be recorded. VAT No: 214 0196 49

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