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PassivSystems

Platform:
Crowdcube
Stage:
Expansion
Industry:
Technology
Location:
UK - South
Date Rated:
11/10/17
Raise:
£650,000
Equity:
2.35%
Valuation (Pre Money):
£27,009,574
Industry: Technology
Location: UK - South
Platform: Crowdcube
£650,000 Expansion
Valuation: £27,659,574
Date Rated: 09/10/17

MANAGEMENT

PRODUCT

INVESTMENT
Tax Status: None

Business Summary

PassivSystems is an energy management company, providing smart thermostats, solar feed-in services, community heating management and asset management solutions. These services are operating in over 40k installations and the company has partnered with some of the biggest energy providers. These funds will provide working capital.

Financial Overview

Date (y/e) Dec-16 Dec-17 Dec-18 Dec-19
Sales Dec-16£3,539,000 Dec-17£6,839,000 Dec-18£10,033,000 Dec-19£12,791,000
Gross Profit Dec-16£2,385,000 Dec-17£4,659,000 Dec-18£6,022,000 Dec-19£7,516,000
GP as % sales Dec-1667% Dec-1768% Dec-1860% Dec-1959%
Overheads Dec-16£3,390,000 Dec-17£4,044,000 Dec-18£4,787,000 Dec-19£5,262,000
Operating Profit Dec-16-£1,051,000 Dec-17£543,000 Dec-18£1,119,000 Dec-19£2,155,000
OP as % sales Dec-16-30% Dec-178% Dec-1811% Dec-1917%
Closing Cash Dec-16£689,000 Dec-17£433,000 Dec-18£2,043,000 Dec-19£4,517,000

Note: This financial information has been sourced from the company on 26/09/2017 or from public sources. Financial data is NOT verified by Wheatfromchaff Ltd.
94%
SKILLS:
EXPERIENCE:
COMMITMENT:
The leadership team covers all the key roles and the CEO and VP Engineering have previously led a company to great success.
The team has ample experience amassed in senior positions in major companies across a range of industries.
The team appears able to fully dedicate its efforts to PassivSystems and they have been working together on the company for some time now.
79%
MARKET:
PRODUCT:
COMPETITION:
Smart energy and domestic power generation are already large sectors and are growing quickly. PassivSystems has solutions for a number of verticals, although success to date has largely been in solar.
PassivSystem's services are already in place in 10s of thousands of installations and they have some major industry partners. Their smart thermostat has won a Best Buy award from 'Which?'.
The established relationships and installations show PassivSystems is off to a very good start, but the pitch doesn't address the issue of how they can beat other established competitors.
44%
PROFITABILITY:
CASHFLOW:
RETURNS:
The company is generating significant revenue and has been EBITDA positive for almost a year now. Growth projections are reasonable but flattening out in FY19.
PassivSystems has indicated these funds are to provide working capital, though it is worth noting that the renewal of a £2.5m bank facility in 2018 hinges on a successful equity raise this year.
Although the company is EBITDA positive, given the entry valuation, capital structure and lack of EIS tax relief, ordinary shareholders are unlikely to see significant returns.


Conclusion

PassivSystems has a highly experienced team with a track record of success that is rarely seen in crowdfunded companies. With major partnerships already in place and the company already breaking-even it would appear at first glance to be a sound investment proposition, assuming the £2.5m bank overdraft is restructured successfully in the new year.

However the capital structure includes a substantial number of preference shares which will pay out a three fold return before ordinary shareholders receive anything. As stated on the CC bulletin board, if the company "doubles in value to £54m and all eligible employee share options are issued, the Preference Shareholder would first get £3 per share, and the Ordinary shareholder £1 per share and from the surplus each would receive a further 44p. So the Preference Shareholder would receive £3.44 per share and the Ordinary Shareholder £1.44 per share."

Furthermore achieving a valuation in excess of £54m will not necessarily prove that quick or easy given slowing sales growth and projected EBITDA of £2.25m in FY19.

Investors should therefore make sure they invest at least £10k to secure the remaining preference shares available.


Related Links

Crowdcube Pitch

www.passivsystems.com

 

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